1.1 The background of the study
1.2 Statement of problems
1.3 Objective of study
1.4 Significance of study
1.5 Limitation of study
1.6 Definition of terms
2.1 Definition of distress in the banking industry
2.2 Nature of distress
2.3 Cause of distress in the banking institution
2.4 The impact of financial distress in the banking industry
2.5 Summary of the related literature review
3.0 Research methodology
3.2 Area of study
3.3 Population of the study
3.4 Samples and sampling procedure
3.5 Instrument of data collection
3.6 Validation of the research instrument
3.7 Method of data collection
3.8 Method of data analysis
4.1 Data presentation and result
4.2 Summary of result findings
5.1 Discussion of result
5.3 Implication of the researcher result
5.4 Recommendation/ solution
5.5 Suggestion for further research
5.6 Limitations of the study
CHAPTER ONE1.1 INTRODUCTION
The research work is about the financial distress in the banking industries, causes, implications, and possible solutions. Bank distress occurs when a bank or some bank in the system experience liquidity or insolvency resulting in a situation were depositors fear the loss of their deposits and a consequent breakdown of contractual obligation. While a bank is said to be liquid when it cannot met up with its liability as when they are matured for payment. It is said be insolvent when the value of its realizable asset is less than the total value of its liabilities (“ a case of negative network “). The cold lead to an overall ruin as the depositor’s loss their confidence in the system and avoid capital loss.
In a different human perspective, bank distress means a different thing. To some people, bank distress exists only when the bank in question ceases to operate even if it has not been officially liquidated. In a wilder contend, a bank is said to officially distress if it has failed in archiving and of the objective for which it was established. The objective of this project among others is to access financial distress in the banking industry, with a view to identify their forms, cause and implication and the possible solution to them.
1.2 BACKGROUND OF THE STUDY
There is distress in the entire environment in the industry, law enforcement, education, communication, transport and other services, perhaps the most dangerous and most pronounce today is the distress in the banking industry, a people and confidence based industry which is expected to be a catalyst not a detonator of economic advancement. It is of a great importance to raise the standard of banking industry in Nigeria to realize that financial distress in the banking industry drive instability in the country. The critical importance of the bank in the economic growth and development explained why each economy takes serious view of their financial distresses. Any worthwhile economy seeks measures to prevent such distress failure in their economy.
In any economy, banking is a critical bridge between deficit and surplus, between dreams and commerce, between theories and industrialization. Recorded evidence show greater number of distressed banks in Nigeria. How long shall we suffer from the woeful distress? Is there any possible solution to the problem?
1.3 STATEMENT OF PROBLEMS
There is problem of financial distress in most banking industry leading to non-availability of cask to meet the day-to-day withdrawal by customers. According to Osuala, (1987), “ The Statement Of A Research Problem” serve to elaborate upon the information in the title of the study” this study is concern with the investigation into the financial distress of the banking industry in Nigeria. Factor often mention for woeful collapse of the banking industry ranges from the external and internal environmental factors in which the bank operates its business. Some of these factors are as follows;
Political instability that cause low investment where production is slowed down.Lack of monitoring expertiseEconomic downturn which deprives the banks of its vibrancy of economics activity because of high depreciating exchange rateRegulatory constraint that contribute seriously to the sanitization of the banking systemFactor within the bank that encourages poor portfolio management
1.4 PURPOSE OF THE STUDY
The purpose of the study implies the aim/objective of the researcher in undertaking the study. It is an overview of the study itself and relate very much to its problems. In vie of the problem stated; the following are the objectives of the researcher includes;
1.to what extent dose the political instability cause low investment?
2. To what extent dose lack of monitoring expertise cause bank distress?
3. To ascertain to what extent has the economic downturn have deprive the bank of its vibrancy of a tool in the economic activity.
4. To assess the extent regulatory constraint has continued in sanitizing the banking system
To ascertain the degree of involvement of factors within the bank that encourages poor portfolio management
1.5 SIGNIFICANCE OF THE STUDY
Significance of the study refers to the importance and the usefulness of the research to the individuals, shareholders, management, potential investors, suppliers, the government and the nation at large. This provides knowledge and information that will bring about a better understanding of the topic under review. Therefore the usefulness of the study ranges from
Help assist the central bank of Nigeria to adopt and improve strategies to reduce adverse effect of regulatory constraint in the banking industry.Provide suggestion to improve the economic activity so as to make the banking industry viable.To provide basic information on the effect of political instability that causes low investment in the economyTo ensure useful solution to lack of monitoring expertiseThe suggest factor within the bank that may encourage good portfolio management. Assist the federal government in its deregulation polices so as to minimize the spread of loan in Nigeria.To disclose basic information on the effect of financial distressing the banking industry to the Nigeria economyProvide useful solution to already distress bank in NigeriaThere should strict enforcement of the provision of the decree un failed bank and financial malpractices in bank degree NO.14 of the 1994 as to control high rate of fraud and financial embezzlement in the banking industryAlso banks should be encourage to re-structure and emerge together to enable it play its important role as well and to survive in the economy.
1.6 DEFINITION OF TERMS
Liquidation: permanent of cessation of business as a result of insolvency or financial distress.
Insolvency: liquidity to pay due obligation as of when due.
Liquidity: an unhealthy situation or state of inability or weakness, which prevents the achievement of the set goals and aspiration. In other words, failure to fulfill obligation
Internal environment: factors primarily within the bank immediate environment which bank can exert considerable influence over them.
Management incompetence: general lack of durable suppression of the managerial skill or Techniquecal know how in the various branches of cooperate enterprise.
Fraud: all act of dishonesty or deceitfulness, the object of which is to sole person or cooperation of property or any belonging without the knowledge of consent of the owner.
Internal control: the whole system of control finically of otherwise established by the management in order to carry on the business of the company in an orderly and efficient manner, ensuring adherence to the management policies and safe regard the asset as far as possible the accuracy and liability of the records.