An Evaluation Of The Effectiveness Of New Products In Nigerian Commercial Banks

An Evaluation Of The Effectiveness Of New Products In Nigerian Commercial Banks

Abstract

The introductory objective underpinning this study was the evaluation of the study of the capability of the new fiscal products by marketable banks in fund conception ormobilization.This study has been structured into five chapters to make for easy reading and appreciation. Chapter one dealt with the background of the prevailing circumstance in the frugality that needed the preface of program intended to correct the imbalance in the frugality. It also gives an sapience into the measure, both financial and financial programs established to make as strong and feasible profitable base for the country’s frugality. From this, other four chapters deduced that base from the chapter bone I order to confirm the findings, recommendations and conclusions. Though the banks have served from their ingeniousness in product, development, certain problems were encountered by some of this banks which include poor communication system( ie) hype, weak data bases, oscillations in interest rate arising from request forces. In view of the findings over, recommendations have been made to help consolidate the banks trouble in new product development. still, it would be not good to mention then that the trend in new product development has been a welcome and satisfying development in the fiscal sector.

Chapter One

Preface

This chapter deals with the background of the study statement of problem, ideal of study, exploration questions, significance of the study, thesis, compass, limitation of the study and description of terms.

Background Of The Study

The period of oil painting smash in 1970’s in Nigeria frugality lead to the nations over reliance on oil painting as its main source of profit and there by ignoring other sectors of the frugality hence a mono- product frugality. Because of this, utmost of the diligence established during this period depended on imported factors and raw accoutrements for their operations, and the upsurge in oil painting profit during the period in question and structural deformations, it formed assumed extremity proportions in 1986 because of the severe decline in crude oil painting price of that time.

A number of measures were taken by the colorful governments to correct the situation, but unfortunately these measures failed because the country was on mono- product frugality where there are heavy dependence on oil painting exports and other sectors of the frugality were neglected. It would also be recalled that financial programs within this period were designed for short term heads control operation, but by 1986 till date, the situation has been getting out of control which needed a long term heads operation of the structural adaptation programme( SAP). The policy was to grease attainment of a lost objects and to correct colorful deformations in the frugality,( SAP) sought within a two time- period to correct the distortation and imbalance essential in the frugality byde-emphasing the unhealthy reliance of the country frugality on oil painting as its main source of profit.

The banks were chosen as main avenue through which the objects of SAP and alternate league foreign exchange request( SFEM) operation could be met, the effect of this was an unknown growth in the Nigeria fiscal sector. SAP branch to exclude all the complex executive both necks and this encourages reliance on request force in all sectors of the public frugality.

The fiscal sector being veritably strategic for progress and development was given the latitude and stimulant to grow. This was aimed at converting competition so that it’s full capabilities particularly in areas of credit expansion and general overall good of the frugality. Prior to this period, banking institution was characterized by the arm president banking and true to their conservative tradition inherited the clearing banks of London, made modest trouble, offered limited traditional product rate of growth and in order to this, deregulation has changed permanently the face of the banking assiduity, and has been characterized by a number of developments which sparked off stiff competition among banks which were the top actors in the foreign exchange request operation made grandiose profit in their deals and theirs rose significantly as a result of the boost in the naira hoping of fiscal institution when their foreign balance were converted to naira.

Because of the heavy development in the deals, the outside investors were motivated into investing in the assiduity and there was motivated into investing in the assiduity and there was corresponding proliferation of operation for banking license, this latterly led to the enrollment of numerous new banks in the frugality which was a welcome development. With this new development of multiple enrollments of further banks, all those old entitlement banks that sewed up the business have to be alert and were ready to scramble for coffers that were preliminarily taken for granted. This lead to constant movements of staff, operation and boards, in and out, new banks opening nearly everyday, constantly destabilizing struggles in board apartments, the implicit guidance and frequent change in regulation by the central Bank of Nigeria.

The general deregulation permitted banks to do a lot further business and particularly the distraction between Merchant and marketable Banking came veritably thin. Other posterior issues are the guidelines like the increase in the statutory deposit of banks( N25 billion recapitalization) at the CBN, rough cash and liquid rates, invalidation of foreign guarantees as collateral for naira nominated loan, stabilization securities, increase in capital acceptability rate and the forestallment guidelines went further to aggravation and the cash squeeze thereby tensing the formerly stiff competition.

In addition to the competition between Banks and individual, the assiduity as a total has been contending withnon-Banks fiscal institutions have now come analogous to those handed by marketable Banks. As a result of the competitive terrain, Banks have been scrabbling for deposits, which formed the main raw accoutrements for their operations.

Banks traditionally perform the function of conciliator between saviors and investors, the rally depositors from the fat sector which is made up of those with numerous investment systems taking further finances than they have. They also act as catalyst in capital conformation which is regarded as the major policy governing the rate of profitable growth and tone reliance. In addition they enthrall a high and sensitive position in accelerating the development of other units in the system.

The attendant effect of empowering further Bank, financial measures and deregulation in that the Banks are forced out to look for other avenue for deposit hence the pining to introduce new fiscal products to win further customer and increased deposit base to enable them survive the rest of time. The growth in the number of fiscal products being offered by banks has been of the most striking development in the assiduity over the times and which has been associated with deregulation of the system in the wake of SAP.

The number of similar products has grown to a far reaching competitive position and numerous further products are still to come, the bones in rotation now includes, weekend services, growers companion to agrarian lending vigor, plutocrat transfer, western union plutocrat transfer, value card, smart card, UBA save for academy, UBA plutocrat gram, Diamond paycard. All these products have been introduced as a result of the increased competition within the terrain to enable the marketable Banks survive the stiff situation.