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THE ROLE OF BANKING INSTITUTIONS IN ECONOMIC DEVELOPMENT

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND TO THE STUDY

Banking Institution are among some of the most important sectors that helps accelerate economic development of any country. Banks are part of the infrastructures of a country. Within which development takes place. They certainly help to shift the economy from the subsistence sector to a cash crop economy by encouraging both the use of money and confidence in it. They provide a convenient means of making payment between people easy, by the use of cheques and also provide safe place for the depositing of money, furthermore, they help development by their help development by their ability to make loans. We have noticed that Akwa Ibom State is one of the least developed state in Nigeria, judging from whatever perspective. The case of Akwa Ibom State is that of backwardness in terms of development in all sectors. In the light of the above problem, the researcher seek to examine the implementations of the above stated roles of the banking institution with a particular reference to Akwa Ibom State.

1.2    THEORETICAL FOUNDATION

Banking institutions are authorized by law to deal with money as such channel of economic development. Basically, they assist in mobilizing funds from those that do not need them for current use, and lent it to those who need them for current productive purpose. However, development functions of bank depends on its ability to create money or wanable funds are greatly influence by such factors as reserves ration, leakages of cash out of the bank to lend for such development purpose and the motives of holding cash. On contrary, where the banks are willing to lend, the creative functions of banks would be hindered where the publics are not willing to borrow for the development activities In view of the above, the researcher seek to examine the above principles or theories vis-à-vis the attitude of Akwa Ibom people toward banking institution and its economic development.

1.3    STATEMENT OF PROBLEM

The Nigeria economy today is a typical example of an embattled economy. That means it has been undergoing several and serious structural problems and dis-equilibrum. Like any other third would or less –developed countries the major problem of utilization of productive resources. In a bid to maintain a healthy economic condition and correct these imbalance as enumerated above, the government has embarked on a number of economic measures to lesson the dominance of unproductive investments in the public sectors as well as improve the sectors efficiency and intensify the growth potential of the private sector. The government has also put in place numerous infrastructures and amenities to transform the nation into an industrial equalitarian society to enable people feed themselves and produce indigenous base raw materials for the home industries. Despite these effort by the government, some state like Akwa Ibom State are still under-developed economy. It was against this background that this research was considered with the aim of examining the extend the banks which are the engine room of the nation’s economy has contributed to the economic development of the state.

1.4   PURPOSE OF THE STUDY

To find out whether the conditions impose by the commercial banks prevent customers from obtaining loans from the bank. To discover these problems associated with obtaining loan facilities from the bank for economic enhancement. To find out whether customers are satisfy with the services rendered by the commercial bank in the state. To discover the range of service rendered by commercial banks to their customers towards improving their economic development. To make recommendation towards minimizating or eliminating such problems associated with obtaining credit facilities from the bank. To know which of this problem is the most pressing to the customers in their course of the demanding for loan. To know whether the efficiency of the develop economy depends on the investment of banking institutions.

1.5   RESEARCH QUESTIONS

What are the services rendered to customers by banks?

Do you think that customers are satisfied with such service rendered to them?

What are the conditions imposed by the commercial bank facilities from the bank?

Do you think that such condition could hinder the customers from obtaining the needed credit facilities.

What could be those problem associated with obtaining loan from the bank?

Which of these problems is the most pressing to the customers?

Do you think that government monetary and fiscal policies could prevent bank from lending?

What would be your suggestion as a means of minimizing if not eliminating problems associated with obtaining credit facilities from the bank?

1.6   SIGNIFICANT OF THE STUDY

This study was carried out with a view to providing valuable information that may be useful to:

Banking Institution: In this case the will be better informed about the salient role their institution played in economic development of Nigeria.

Government Economic Planners: In this case they will be made to know that banking institution plays a very important roles in the stability of any economic. To this end, they will now be in better position to know the kinds of law and decrees they make so as to encourage them to stay in business instead of forcing them out of business.

Investors: Through this study, the investors will come to appreciate what these institution would do for them either to stay in business or to get the business expanded.

Other Researchers: In this case, the present study may serve as a source of information to other interested person that may want to carry out research in this topic in other areas.

1.7    ASSUMPTION OF THE STUDY

The roles of bank has been so important to the economic development of our state. It is assumed that interest rate would be moderate enough to encourage investor to borrow from the banks. It would be assumed that government monetary and fiscal policies will encourages banks to lend out money. It will also assumed that money borrowed would be economically use for the purpose for which such loans was obtained. It is assumed that borrower will repay accordingly to the repayable schedule to establish confident between banks and borrowers.

1.8    DEFINITION OF TERMS

Embittered: Undergoing serious structure problems.

Banking Institution: This refers to the bank or financial institution authorized by law to deal with money, and as such as channel of economic development. They assist in mobilization funnels for those who need them for current use.

Economic Development: These are social infrastructure of a place within which the development shift from the subsistence sector to cash crop economy by encouraging both the use of money and cheques.

Banking Ordinance: This is the setting of guideline or authorities for bank to operates so as to protect the bank depositors and to restore public confidence on people on such matters as liquidity and reserves.

Advances: This refers to sum of money granted from the bank to individuals or organization to embark on business purpose, it could be inform of loan or overdraft. It usually attract interest rate.

Lag: Not keeping up with, which is two slow, this will be the difficult to the bank to perform their function by providing credits to investors.

Liquidations: Becoming bankrupt this is always the difficult situation for bank to grant loans to its customers, the creative functions of the bank will be hindered when public are willing to borrow for development activities.

THE ORGANISATION OF THE STUDY

The study was organized into five (5) chapters. Chapter one contain the following: The Introduction, Theoretical Foundation, Statement of the Problem, Purpose of the Study, Research Questions, significant of the study, Assumption of the Study, Limitation of the Study and Delimitation of the Study, Definition of Terms and Organisation of the Study. Chapter two, this chapter present the literature review of the various authors in relevant field with the main topic beings discussed. Chapter three, present the research of Methodology and Resign of the study. Chapter four, present the data analysis and interpretation through the use of table and figures to explain the findings. Chapter five, is the final chapter comprises the summary, recommendation, conclusions and appendix.

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