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The Impact Of The Nigerian Economy On The Banking Sector


This study is on the impact of the Nigerian economy on the banking sector. The total population for the study is 200 staff of UBA, Lagos state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made managers, accountants, customer care officers and marketers were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies.



  • Background of the study

The history of Banking in Nigeria started back in 1892 with Eider Dempster company which engage itself in the business of moving coins around the country, later that year African banking cooperation was found which provide services to elder Dempster company failure of the bank led to the formation of bank of British West African, but between 1929 – 1951 lead the establishment of indigenous bank and even more today where a lot of them have collapsed as result of mis-management, under capitalization among the factors. Bank have crucial role to play in a nation’s quest economic development. They serve as major institutional mechanism for mobilizing resources from surplus unit of the economy and channeling these to deficit unit through credit expansion. According to Usman (1997) Bank occupies center stage in the effect of accelerating of both local and foreign resources for investment purpose”. In any economy, the financial system is the hub of productive activity, as it performs the vital of financial intermediation. It is the primary provider of payment services and fulcrum of monetary policy implementation. As cited by Dicko (2005) the neo-classical production theory identified capital and labour among others as critical factor determining growth in output. But in developing countries with abundance of cheap labour, capital is very scarce and expensive. The financial institution by providing the much need capital for output the growth fills an important gap in the development process”. It could also be emphasized that there have been significant contribution by past economist such as Devidson (1994) and Mishy (1975), following the seminal work of Melemon (1973) and Shaw (1973). They emphasis that financial system does matter in facilitating economic development under a liberalized and reformed environment. Dikleo (2005) is of the opinion that the concept of development and growth has universally transformed to a wider phenomenon. Some 50 years ago it focused on economic variable only. Today it encompasses indicator (HDI) have replaced the tradition per capital income’ as indicators of development”. The main thrust of his project is to identify whether the financial system and the banking system in particular has been able to social economic roles of equitable wealth creation. This project centers on the role of Banking and Finance in the development of Nigeria economy with particular reference to united bank of African (UBA) Nasarawa Branch. The project will give a highlight on the development of banking and Nigeria and laid down emphasis on the different kinds of Banking and their various function of the effect the economy. Nigeria has a vital growing market in African and has a recent years acquire important role in the world economy with a population of 120 billion (appropriately) people which endorsed with the fast and largely untapped natural resource with petroleum being the major foreign exchange earner. Nigeria banking system evolved it increasing assisted in resources mobilization for economic development prior to the establishment of the central bank of Nigeria in march 1958 operate as rudimentary banking system tailored to need of British government, had been as existence in the Nigeria. Banking has contributed immensely to the Nigeria economy, it has provided services of employment opportunities and services to the masses on the businessman, client and the government from to time. There are various bank that can be classified or mention e.g. Central Bank, Universal Bank Merchant bank and Mortgage bank etc. the universal bank can be identified by the services they render such as saving bill of document and act as an agent to the customer, granting of loans, import and export financing. The universal bank institution in Nigeria can be classified into two major groups. These are purely indigenous bank owned 100% and minority foreign interest. However, prospect is therefore aimed at high the impact of the universal bank in the economic development of our great nation (Nigeria) by appraising their performance. The introduction will not be complete without recognizing the apex of the banking industry that is the central bank of Nigeria (CBN) which is charged the responsibility of maintaining the monetary standard and sound financial structure with objective of creating approximately environment for economic growth and development.


The impact of bank services especially universal bank cannot be over emphasize. The main reason for this research work is to discover the problem militating against their operation, these problem have to be consider with the aim of giving relevant suggestion for improvement, the problem there among other things included. Bank include those of poor record keeping, poor account system, embezzlement, fraudulent practice, poor organization planning control and loan portfolio management, problem of competition, the market for banking service is not homogenous its differentiation by preferential to the characterized of client or customer and by the traditional to which banking houses are accustomed.


The objectives of the study are;

  1. To ascertain the impact of Nigerian economy on the banking sector
  2. To ascertain the role of banking sector in the Nigeria economy
  3. To ascertain the relationship between Nigeria economy and banking sector

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

H0:   there is no impact of Nigerian economy on the banking sector.

H1: there is impact of Nigerian economy on the banking sector.

H02: there is no role play by banking sector in the Nigeria economy

H2: there is no role play by banking sector in the of Nigeria economy



The research is significant to business and to banking sector, the government and any person intending to invest in banking sector to also help investor both in public and private sector of the economy. To specific roles played by banking sector in the development of economic which may include bank facilities and consultancy among others. It may enable the general public to realize the role and importance of banking sector toward economic development.


The scope of the study covers the impact of the Nigerian economy on the banking sector. The researcher encounters some constrain which limited the scope of the study;

  1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
  2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
  3. c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities


Bank: A bank is a financial institution owned by the shareholder, the public or the government. This money and other valuable thing are kept. They give loans and overdraft to their client and perform other related universal activities to them.

Banking Services: The banking act of 1969 define banking or banking business as “The business of receiving monies from outside source as deposit irrespective of the payment of interest and granting a money loan and acceptance of credit or the purchase or bill and cheque. The purchase and sale of securities for account or other measuring of the obligation to require claims in respect of loan prior to their maturity or the assumption of guaranties and other warrantee for others.

Economic growth: Economic growth is the increase in the inflation-adjusted market value of the goods and services produced by an economy over time. It is conventionally measured as the percent rate of increase in real gross domestic product, or real GDP


This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study

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