CHAPTER ONE: INTRODUCTION

1.1    BACKGROUND OF THE STUDY

          The growth of economy and development of banking have often appeared inseparable until l7 century, there had existed on modern banking institution anywhere, and there had on modern developed economy. Before 1892, Nigeria was evidently underdeveloped economically, even in 1975, however, despite the growth in the number of banks Nigeria is still developing it is true that the number of bank should not be the only or even the major aspect of banking development have been taken account, it would still not be correct to imply mono casual relationship between the development of commercial bank and the growth of a modern economy.

          So many factors determine the level and the rate of development of an economy .the natural resources endowment, labour supply and capital Are economy blessed with precious minerals, valuable agricultural crops and a suitable land water mix, is in a better position to develop than another economy with out these, other things being equal. In the same manner a country that does not have adequate supply of requisite manpower is at advantages. this is why most countries put a premium on manpower development, the justification for this phases has been succinctly put by Harbinsan, in-deed if a country is unable to develop its human resources, it cant build anything also, where there is modern political system, a sense of national unity or a prosperous modern economy we need not to add anything also.

          Capital is another critical factor required in the process of development .the term of capital however requires some elucidation. At times, the term capital is used to refer to man made physical facilities that aid further production of good and services, machineries and equipment are such facilities, otherwise called real capital they are produced to serve he needs of further production and not serve the needs of immediate consumption such good imply the existence of some surplus over and above the requirements for consumption purpose.

          Financial capital commutes also an ideal of surplus the saving that that result from society income that have not been spent on procuring good for consumption go make up the financial capital . Financial capital is required to procure the real capital it is the concern for the provision of financial capital market the development of a capital market a desideration in an economy commercial banks happen to be a subset of these institution that makes up the capital market