Significant progress has been made during the past years but more intensely during the last five years towards the significations of the Nigerian financial sector through the implementation of distress resolution options. The Nigerian financial systems comprise the financial institutions rules and regulations instruments, and markets for effective intermediation. The financial institution unit of the systems comprises two major categories of institutions in the Deposit taking types and the non-Deposit taking types.
Deposit taking financial institutional include banks, and other saving institutions.
The Nigerian financial sector has been in state of trauma. The banking industry was not exception. Financial distress, non-supportive investment climate, political instability and likes and the major problems that militate against effective banking systems in Nigeria.
Financial distress is an ancient problem that had posed great difficulties to the Nigeria banking sector. The incident of distress in the Nigerian financial sector was first recorded in history during the 1930 world economic depression.
Distress in the Nigerian banking system dates back to the early 50’s when about 51 banks were forced out of the system following the introduction of the very first banking law in Nigeria, the banking or distance of 1952. The ordinance and the CBN Act of 1958 brought the first ever regulation and sanity into the banking system, which was formally a free banking, era. However, the degree of intensity and the scope of financial distress in banks had never been as deep as has been observed since the year 1986. the periods of years starting from 1986-1995 witnessed the greatest ever recommended distress incidence in the Nigerian banking industry. This owned its strength from the operational issues involved in the introduction and implementation of the structural adjustment programme (SAP). During the SAP, the economy was deregulated, banking licence was easily obtained, there was an influx of the banking system with both efficient and inefficient banks.
The incidence of financial distress got of it peak in the year 1989 when the government withdrew its deposit and that of the other public sector institutions from commercial and merchant Banks to the control Banks of Nigeria. This act exposed the weak financial conditions of most banks.
The monetary authority had come with more regulations and regulatory policies on the banking industry in the development sector in a modern economy cannot be over-emphasized. The important of a banking sector in any economy derives from its role of financial intermediation, provision of an efficient payment system, and facilitation of the implementation of monetary policies. An efficient and effective banking sector is essential not only for the protection of depositors encouragement of healthy competition maintenance and protection against system risk Ebhodaghe (1996:24).
Another role or essential role that is being carried out by banks, states by Emekekwue is the role of transferring saving from the surplus economic units of deficit economic units who will utilize these saving in generating investments. The savings surplus economic units would in the process have earned income in the form of interest on those funds that could have been lying idle. Whole the savings, deficit economic unit would in the process earn profit from their investment. It is against this background that they are called financial intermediacies (Emekekwue 1997:15)
In contrast to the ideal, the Nigerian banking sector is caught up in systemic crises.
The menance of financial distress in banks lead to every many reactions and actions taken by the federal governement and its agents in financial matters (The Central Banks of Nigeria ).
Among the actions taken include the terminations of SAP in the year 1991 following the enactment of Bank and other financial institutions Decree (BOFID)No 25 of 1991 still on its attempt to provide a cushion against further bank failures, the Nigerian Deposit Insurance Corporation (NDIC) was established under the NDIC decree No 22 of 1988 by the federal Government there was also the introduction of the prudential guideline the year 1990.
Re-capitalization and stringent regulation of banks were also among the effective tools adopted by the government and the CBN to fight against financial distress in Nigeria.
It is the objective of the research work tot identify the main course of distress in the Nigerian banking sector, assess the NDIC set out modalities for fighting and managing financial distress in the banking system.
The researchers would also try to assess the NDIC performance in it financial distress management role in the banking industry.
Many problem facing the corporation in its distress management functions shall be discussed, suggestions on better options for achieving the aim of its establishment this piece of work has much to tell about the NDIC and its roles in banking distress management.
TABLE OF CONTENT
Title page ii
Table of content viii
Chapter One: Introduction 1
1.1background of the study 1
1.2Statement of the study5
1.3Objective of the study7
1.4Research question 8
1.5Research hypothesis 9
1.6Significance of the study 10
1.7Scope, limitation and delimitation 11
1.8 Definition of terms 13
Chapter two: review of related literature17
2.1The rule of N.D.I.C in sanitizing the banking sector.18
2.2Supervisory activities of the Nigerian
deposit Insurance Corporation.19
2.3Functions of the Nigerian
deposit insurance corporation20
2.4Supervision activities of the NDIC27
2.5Off-site surveillance 28
2.6On-set examination 29
2.7Meaning of bank distress 32
2.8Implications and consequences of bank distress.35
2.9Techniques for identifying
financial distress in banks 38
2.10Either qualitative or indication 39
2.11Management of financial distress 44
2.12Resolution of banking distress in Nigeria48
Chapter three: Research design and methodology 64
3.1Research design 64
3.2Area of study64
3.4Sample and sampling techniques 65
3.5Instrument of data collection 67
3.6Methods of data collection 68
3.7Methods of data analysis 68
Chapter four:Data presentation and analysis71
4.1Distributions of questionnaires 71
4.2Test of hypothesis72
4.3Test of hypothesis using chi square75
Chapter five: findings, recommendation and conclusion 83
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