This study examines
critically the relationship between financial institution and the economy as a
The flow of funds within
an economy provides a useful starting points for looking of a country's
financial system. The great roles the banks play in the implementation of
government monetary policies as a factor which out them right as the Centre of
economic policy of a country.
This study also was embarked upon with the
intention of determining the 'role of financial institution in the development
of Nigerian economy with emphasis on banking sector.
This study observes from
the hypothesis tested that financial institutions particularly Banks are very
much aware of their financial intermediaries roles. The project attempted to
find out whether financial intermediaries roles and other roles that are
expected of them in terms of economic crisis.
The major sources of the
data used in the process of this research work are the primary and the
secondary data. The idea Statistical tool adopted for the purpose of this study
is the statistical package for social science (SPSS).
TABLE OF CONTENT
Table of Content
1.2 Purpose of Study
1.3 Scope of Study
1.4 Limitation of Study
1.5 Historical Background of Wema Bank PIc
1.6 Project Budget
1.7 Problem of Study
CHAPTER TWO: LITERATURE REVIEW
2.1 Evolution and Development of Banking in
2.2 Financial Intermediation and Economic
2.3 Review of Some Related Literature
2.4 The Relationship between
Financial Institutions and the Economy as a Whole
2.5 The Banking System and the Management of
the Nigeria Economy
2.6 Criticism of E-Banking System and the
Constraints facing it
2.7 The Expected Roles of banking
Sector in a Depressed Economy
2.8 The Operation of commercial
Bank in Nigeria
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Method of Data Collection
3.2 Population and Sampling
3.3 Research Instrument
3.4 Techniques Data Analysis
3.5 Conduct of field Work
CHAPTER FOUR: PRESENTATION OF DATA ANALYSIS
4.1 Analysis of part One (General)
4.2 Test of Hypothesis
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
1.1 BACKGROUND TO THE STUDY
A financial institution
can be defined as any institution which portfolios of assets consist largely of
claims rather than inventory, plant and equipment. Financial institution serves
as intermediaries in the financial markets.
However, since emphasis
will be placed in banking sector as a financial institution. It will be proper
at this point to make known what the banking sector entails and its role in the
development of Nigerian economy.
The banking industry is
of tremendous relevance to the economic development of any nation in the sense that
it is responsible for the allocation of funds to different sectors and
sub-sectors of the entire economy. These sectors include agriculture,
manufacturing, mining, construction, transportation, tourism, to mention but a
few. The economic situation of Nigeria today is of great concern to all and
this led to the introduction of different measures by the Federal Government to
bail the economy out of total collapse.
The introduction of
economic measure such as privatization of government parastatals, the Foreign
Exchange Market, and then the fate of Naira is being determined by the forces
of supply and demand. And the structural adjustment programmed. All these
activities are being involved by the banking industry for adequate
implementation in order for the government to achieve its aims on restricting
the country's economy.
The recent increase
witnessed in the number of commercial and merchant banks in the .country to
satisfy the demand of the increasing population on business financing and other
financial related areas has necessitated a careful look at the activities of this industry, its
relevance, with a view to explain its vital role to the economic development of
Primarily, a bank is a
financial institution where money and other valuables such as gold,
certification, wills share certificates, to mention but a few, are kept for
custody. In modern day banking however, this function has been enlarged and
obviously modified. Hence, present day banking would be modified as the art of
safekeeping, exchanging, lending and borrowing as well as an advisory services
for all which combine to make money available or funds and immediately put to
Banks in this regard
constitution most important points upon which the wheel of the economy in
general rotates. In the economically development countries such as the United States,
Canada, Banks perform
such additional functions as setting and clearance of daily credit purchase
cards and night saving facilities which are services not available in
developing countries of Africa.
In Nigeria, there is a
remarkable increase in the function performed by our banks. This include
acceptance of deposits account holders, granting of loans and advances, foreign
exchange, discounting bills of exchanges loan syndication, equipment leasing,
effecting merging and acquisition of companies. Also banks offer financial
advice to numerous customers.
projects, issuance of letter of credit to their customer, acting as Trustees
and Executors and Agents in the buying and selling of Stock Exchange Securities
on behalf of customers.
1.2 PURPOSE OF STUDY
These have been rumored
that financial institutions are not helping the revamping of the economy but
are more interested in making profits, not only profits but large profits that
are supposed to be plunged back in the economy but are not.
The purpose of this study
with special reference to the banking industry is therefore to find out the roles
actually played by the banks on the present state of economy i.e. to
come to a conclusion as to whether these roles are effectively developing the
1.3 SCOPE OF STUDY
In view of the greater
role played by the financial institutions in executing government policies aims
at developing the Nigerian economy and in view of the fact that the banking
sector touches every sector of the Nigerian economy, it is important to limit the
study of the role played by the banking industry with a brief mention of the
insurance industry, the Nigerian Stock Exchange and a few other financial
1.4 LIMITATION OF STUDY
In actual, no one can
boldly state or give the time picture of what future have for him but one can
still do this to some extent based on one's experiences of the past, and the
present condition. In the light of the above, the researcher can state as follows
the limitation likely to be encountered in carrying out this research:
To be specific, time can
never be enough since any research work is based on finding out facts in which all
now changes are known. And most importantly, changes occur almost every day.
This is yet another
constraint in that to carry out any research, a lot of money is usually being
spent - transportation, typing, binding.
The above mentioned
constraints in tum affect geographical coverage of this work in that both are
used in implementing the later. Moreover, some Nigerian economy covers the whole
country; there will be no time, money to cover all the geographical regions. In
the light of the above, the research will be carried out in Lagos.
1.5 HISTORICAL BACKGROUND OF WEMA BANK PLC
Wema Bank PIc is a
Commercial Banking Institution Incorporated in 1945 as a private Limited Liability financial
institution under its old name, Agbonmagbe Bank Limited.
The bank with a modest
beginning now has over 154 branches at various major locations in Nigeria. It
has also effective connection in the business centre of the world, allowing the bank
to offer fast and efficient banking services within and outside Nigeria. The
bank functions are regulated by a general policy formulated, approved by the
board that embodied operational, accounting personnel, lending and expansion
Recent time has seen
tremendous growth in all sphere of its operations.
There has also been a
phenomenal expansion in its clientele among who are statutory corporations,
agriculturist, state and local governments, commercial houses, industrialist,
on a cross-section of the general public. The bank is presently directed by a vividly
and Dynamic board in whose hands its future development lays.
Physical development and
computerization of the bank, apart from the bank's purchase for strong and
functional physical structure, the interplay of real aesthetic beauty and value
depicts the uniqueness in the overall design of Wema Bank, Urban, Semi-Urban
and Rural branches.
The bank's branches at
Apata, Tponri, Edun-Abon Mokola, Olubadan, Dopemu, Ondo Town and a host of
others are just a few example of its uniqueness in architectural design.
At a time when Computer
Technology is being introduce as a way of enhancing qualify and fats service in
the banking industry. Wema Bank has in fact successfully computerized its Head
Office Account and a greater number its branches.
plans are already a foot computerized the few remaining branches.
This is not only in
consonance with modem banking needs; it also underscores the desire to deliver
their services with minimum delay in a relatively conducive environment.
Also, a strategic
business unit which is aimed at planning for the future of the bank as' well as
making it to stay afloat in the country's present harsh economy condition has
been set up.
Wema Bank's corporate
ambition propelled by the ever interesting need to consolidate as well as
improve as its achievements has led to the introduction of many products
Short-term and medium-term loans
Bankers Acceptance/Commercial Papers
• Participation in loan
• Trade finance
• Export finance
• Equipment leasing
• Advance to corporate
• Business advisory services are also provided free of charge to the customers
of the banks.
• Invisible trade
transaction (i.e. buying and selling of foreign currencies, personal home
• Visible track
• Export services.
1.6 PROJECT BUDGET
For any project to be
successfully executed in which research is no exemption, a certain sum of money
has to be earmarked, fixed or budgeted for it. Through it might not accurate
but it is good not to be surpass amount budgeted for. However, in carrying out this research, the
amount can be broken down as follows:
In depressed economic as experienced in
Nigeria. The banks are hampered in carrying out their rates in revamping the
economic by a number of factors. One of their major difficulties is in
connection with existing loans and advance to the public sector which are long
The amount as at the end
of 1991 was put at N23.5 billion and was owed to the banks by various state
government and their agencies.
N34.6billion as at 2011.
A substantial proportion of these debts arose out of credit to state government
for the direct payment of wages and other emoluments to their employees and
credit provided to the governments and their agencies for financing various
In addition to these
direct lending to the government arid their agencies, the banks have also made
huge lending to many contractors who had worked for the government and their agencies
and who were yet to be paid for such projects or other jobs performed. Although
some improvements in the repayment and saving of these overdue loans and
advances have been made, what remains outstanding continues to determine the
amount of progress the banks could ensure, made In sustaining the nation
economy by recycling lending into more productive areas. This capital market is
still fading a lack of general public awareness about the securities business.
The surrounded by mysticism among the general public. This state of ignorance
can be exploited by unscrupulous individuals at the expense of the general
Furthermore, there is a
high disproportion between demand and supply of securities as many indigenous
businesses are adverse to public quotation of their businesses mostly for fear
of losing control.
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