THE ROLE OF FINANCIAL INSTITUTION IN ENHANCING BUSINESS ACTIVITIES

(A CASE STUDY OF FIRST BANK OF NIG. PLC ENUGU)

ABSTRACT

Financial institution has contributed immensely to the development of the economy of Nigeria by enhancing and playing a significant role in the activities of business in the economy and also contributing to the different sectors of the economy.

            In recognition of the important role of financial institutions in development of economy, this project work has been designed to enlighten all interested individuals who may not want to go into one business line or other on the availability of funds for them in any financial institution such as commercial banks like First Bank Nigeria Plc.

            The more individual’s ventures into business line, the more developed the nations economy becomes because the development of any given nation is measured by the numerous business activities going on in the nation.

During the course of this study, book and journal were consulted to ascertain the extent to which these financial institutions have actually displayed its role in enhancing business activities and it was discovered that its contributions can never be over emphasized.

Despite the financial institutions achievements so far, recommendations were made to help the performances of these banks so that more people will use the banks available opportunities especially in the area of bank changes electronic banking card product, money transfer services both domestic and abroad, agriculture financial etc.

TABLE OF CONTENTS CHAPTER ONE Introduction                                                                           

Background of the study                                                       

Statement of the problems                                                                 

Purpose of the study                                                              

Scope of the study                                                                             

Research questions                                                                 

Significance of the study                                                                   

Limitation of the study                                                                      

Definition of terms                                                                            

Research hypothesis                                                               

References                                                                                         

CHAPTER TWO Review of related literature                                                               

The need for financial institutions                                         

The way financial institutions has helped in

enhancing business activities                                                 

The influence of financial institutions                                               

Reference                                                                                           

CHAPTER THREE Research design and methodology                                                    

Research design                                                                                             

Area of the study                                                                                           

Population of the study                                                                                 

Sample and sampling procedure                                            

Instrument for data collection                                                                       

Validation of the instrument                                                  

Reliability of the instrument                                                              

Method of data collection                                                                 

Method of data analysis                                                                    

Reference                                                                                                       

CHAPTER FOUR

Data presentation and analysis                                                          

Presentation and analysis of data                                                      

Testing of hypothesis                                                             

Summary of result                                                                              

References                                                                                         

CHAPTER FIVE

Discussion, recommendation and conclusion                                                

Discussion of result finding                                                   

Conclusion                                                                                         

Implications of the research finding                                      

Recommendation                                                                               

Suggestion for further research                                                          

Limitation of study                                                                            

Bibliography                                                                          

Appendix I                                                                                         

Appendix II                                                                                       

CHAPTER ONE INTRODUCTION

BACKGROUND OF THE STUDY

The stand of economic development is a total sum of all the effective and efficient business activities of the country either home or abroad.

There are vital roles, which the financial institutions have to play in this development.  The survival and future of a given nation is hooked on the volume of business activities of that nation, also the availability of fund for financing the activities is necessary.

The main purpose of financial institution is to aid private individuals and government to finance their business projects.  Financial institution could be seen as the pillar that causes business activities to progress.

There are financial institutions that deal with physical cash transaction, these institutions are known as banking system for example First Bank Nigeria Plc and there are non-banking financial institutions they complement the activities of the financial institution of business project.  These institutions are known as non-banking system.  Examples include National Providence Fund (NPF) financial companies, pension scheme, insurance companies, the corporative society, investment companies.

Furthermore, there are various markets that make up the financial institutions.

Foreign exchange Market:  This type of market creates opportunities for foreign exchange for the benefits of investors in carrying out international business.

Liquid capital and money market:  This is where long and short term lending and borrowing instruments are treated by the owners and users of fund.

Stock Exchange Market;  In this market the share of the companies and declared for interested agents to buy.  For the main reason for this study, the researcher will be writing on the banking financial institution but before limiting it to the case study, below is a short history of commercial banks in Nigeria.

COMMERCIAL BANKS IN NIGERIA (ORIGIN)

            Banking business in Nigeria started in 1892 by African Banking Corporation, invited from South Africa.  The bank was taken by British bank for West Africa in 1894 now known as First Bank of Nigeria Plc Barelays Bank now known as Union Bank of Nigeria Plc was established in 1917.  The two expatriate banks dominated the banking industry or sector until 1933 when National Bank of Nigeria was established.

According to Nwankwo (1980), many indigenous banks were established between 1929 and 1952, but most of them failed dur to poor management, mal-administration, lack of training and motivation apart from low capitalization and stiff competition from foreign owned banks.  Only three indigenous banks and two foreign owned banks survived that period.  By 1952, the First Bank ordinance was introduced.  It stipulated minimum capital base and locating for banks.  Soyobo (1991) called the period that followed 1952 to 1959 the first banking boom era.

However, Nwankwo noted that no bank was established in Nigeria between 1962 and 1970, presumably because of the impact of regulations and the civil war (1967 – 1970).

The industry has twelve (12) Merchant Banks and 29 Commercial Banks in 1986, but by December 1990, there were 48 Merchant banks and 58 commercial banks apart from 5 development banks and the people’s bank established in 1989.

First Bank of Nigeria Plc was incorporated as a limited liability company in 31st March 1894 with head office at lever pool.  It started business under the corporate name of the Bank of British West Africa (BBWA) with a predecessor, the African Banking Corporation that was established earlier in 1892.  This lead to the prominent position, which the bank has to establish in the banking industry in West Africa.

For over a century, First Bank of Nigeria Plc has distinguished itself as a leader banking institution and a major contributor to the economic development of Nigeria.

In the early years of operations, the bank recorded an impressive growth and work closely with the colonial government in performing the traditional function of a central bank such as; issue of space in the West Africa sub-region.  It was a progressive system that a branch was opened in Accra Ghana in 1896 so as to justify its West African coverage also in 1898, another branch was open in Freetown Sierra Leone.  This operational system marks the beginning of the banks International banking operation.

And in 1900, the bank established second branch in Nigeria and was located in Calabar.  Two years later the operation was extended to the Northern part of the Nigeria.

            The bank has network coverage of 315 branches throughout the federation including a branch in the city of London and it maintains the largest branch network in the banking industry.

STATEMENT OF THE PROBLEMS

Banking is a long-term system of which expected funds are committed to enterprises to pay back within a period of time for about twenty years depending on the type of loan.  But in the recent past, banks have failed to function effectively in this area and there have been several complaints such as frequent appointment of directors, habits, high staff turnover etc, this has also led many banks into distress, so the researcher wants to find banks into distress, so the researcher wants to find out the causes of the problems and proffer a suggestion.

PURPOSE OF THE STUDY

The sole aim of this research study is to identify the role of financial institution in enhancing business activities in the Nigerian economy, with reference to First Bank Nig. Plc Enugu Branch.

This research will draw down to the topic of the research work and the problems encountered in the nations economic development and as well recommend some possible solution to the problems.

To identify reasons for low lending habits

To ascertain their lending regulations and rates

To find out whether they have qualified staff as top management

SCOPE OF THE STUDY

This research work covers the specific roles financial institution plays in enhancing business activities in the country and its consequences on the economy of Nigeria using First Bank Nigeria Plc as a case study.

RESEARCH QUESTION

The questions to carry out the role of financial institution in enhancing business activities have brought about the following research questions.

To what extent has First Bank Plc gone to satisfy the needs of their customers in creation of bank deposits?

To what extent do banks give loans to their customers?

Do customers payback the loan as and when due?

What machinery are used in recovering the loans if not paid back?

What are the qualifications of managers handling the unit?

SIGNIFICANCE OF THE STUDY

This research work will help the entire economy especially business organizations, the government and other banks in their decision-making as well as help to improve their performance of business activities.

It will also go to a very great extent in helping those that have no knowledge of what banking is all about and all the students in higher institution who are inspiring to know about the subject matter.

DEFINITION OF TERMS

ROLE:            Duty in an undertaking

FINANCIAL: Concerning money and finance

INSTITUTION:          An institution is an organization established for social, educational, religious etc purposes.

PILLAR:         Supporter of business activities or something

TRANSACTION:      The act of carrying out business activities with somebody or an organization.

ACTIVITIES: Programme going on in a particular business

RESEARCH HYPOTHESIS

Ho1:      First bank do not satisfy the needs for their customers in creation of bank deposits

Hi:       First bank satisfy the needs for their customers in creation of bank deposits

Ho2       Customers do not pay back loan as at when due

Hi        Customers pays back loan as at when due

Ho3:      The extent of bank loan to customers is not encouraging

Hi:       The extent of bank loan to customers is encouraging

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