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CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND TO THE STUDY   

Over the last couple of decades the Nigeria almost crude form it has characterized with in pre-colonial and colonial dry. It has become sophisticated that economic experts today can proudly  thump their chests. With due regard to ownership structure of the institution, the regulatory framework, the instrument employed and number of established institutions, Nigeria can be said to posses the most sophisticated financial system in Africa. Within the Nigeria financial system itself, the banking institution have been most remarkable in growth this is just as well in any case considering the critical position which they occupy in a complex financial position which supplies the money and cridit needs of the economy.

The world bank nor banker is neither used nor declined in the central of Nigeria (CBN) Decree No 24 of 1991 nor bank and other financial institution Decree (BOFIO) No 25 of 1991 but section 2 of bill of exchange act 1881 provides that bankers include a body of persons whether incorporated or not who carry out the business of banking section 2 (1) of the Evidence act defines banks bankers to means “any person or persons, partnership or company carrying on the business of bankers.

In view of these highlights, it becomes easily comprehensible why the failure of a bank has fare reading consequences the ability of bank to operate successfully  rest upon how well they are able obtain the contidence of the public if that confidence is missing the gap will be too great for the banks  to fill the effects of bank failure on economic development of Nigeria can be expressed in a nut-shell to be the following.

a.  Lack of effective and efficient financial intimidation

b. Loss of public confidence in the system further depression of the economy additional burden on the regulatory authorities escalation of social vices.

For the sake of citizenry and in the interest of economic development there is as expedient need to devise a host of remedying situation. The fact that a bank fail today is not to say that incidence is systemic there must be a number of way out of any sad predicament. The only crack is how will these remedies are frothily employed such remedies would include:-

a. The cultivation of a stable political environment.

b. The strengthening of regulatory agencies

c. The taking over by regulatory bodies of all terminally distressed banks.

d. Privatization and commercialization of all government owned bank

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