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EFFECT OF BANK CHARGES ON CUSTOMER SAVING CULTURE A CASE STUDY OF UNION BANK PLC

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

CBN governs financial corporations alone and encourages the growth of specialized or development-related financial institutions. The Securities and Exchange Commission (SEC) is the primary regulator of the capital markets. The Nigerian Stock Exchange (NSE) is a self-regulatory or user-regulatory agency. The capital chain is becoming increasingly complex as issuers, registrars, and investment dealers interact with the money market. The monetary authority and joint control of the bureau de change are formed by the Federal Ministry of Finance and the Central Bank of Nigeria (CBN). The insurance sector is regulated by NAICOM, whereas mortgage lending is regulated by FMBN in Nigeria. Savings are a type of financial asset that public and private entities accumulate in the structured financial system. The transfer of funds from the private and household sectors to the commercial or enterprise sector is required to enhance financial savings, which leads to greater investment, income growth, employment, and capital formation. This aim will be impossible to fulfill unless Nigerians increase their savings rate. High bank fees, limited capital gains, insufficient investments in productive and non-productive instruments, gold, jewelery, income disparity, and demonstration effects, to name a few factors. The current state of the aforementioned financial sector, as well as citizens’ savings habits. One of the main causes of austerity is the increase in bank charges, which will eventually contribute to a halt in economic growth and development (Uremadu, 2006). Savings and banking fees have always had a strong relationship, which explains why many emerging countries have had poor growth. Nigeria, for example, has been blamed for low savings and investments. This lack of growth has resulted in a significant drop in investment. Domestic savings rates have remained stagnant, worsening an already precarious balance of payments scenario (Chete, 1999). The importance of savings in a country’s economic development cannot be overstated. Savings is defined as the part of one’s income that is not spent on immediate consumption. Financial sector instructions, such as deposit banks / commercial banks, mobilize deposits in an economy. To ensure a high positive real rate, the deposit rate must be relatively high and the rate of inflation must be controlled, which will encourage investors to save on their disposable income. Nnann, Odoko, and Englama (2004) believe that financial institutions in Nigeria raise a limited amount of money for a variety of reasons, ranging from excessive bank fees to low savings rates due to bad habits or banking cultures. Another impediment to raising funds is the banks’ stance toward small savers. Another stumbling block to rescuing mobilization. One of the causes is that established banks underestimate the need to organize and invest in economic investments in rural areas due to austerity measures. It is frequently asserted that because the rural economy runs at a near-existing level, very little resources can be withdrawn from income and consumption. As a result, albeit modest units per person, it has not been discovered that there are substantial quantities of underutilized monies in rural areas. There is a general absence of savings incentives in Nigeria, which has a negative influence on saves. We shall continuously monitor the impact of these elements, which include bad banking habits, bank attitudes toward economies of scale, bad orientation, unemployment, political instability, corrupt taxation system, and banking system instability.

 STATEMENT OF THE PROBLEM

Nigeria needs to make more efforts, particularly to mobilize small savings in urban and rural regions, as well as the process of financial intermediation itself, because the country’s saving culture is low in comparison to other emerging countries (Uremadu, 2006). It was highlighted in this context that commercial banks have the ability to mobilize funds and use them for investment in the course of their duties. Given the challenges with the formal sector, well-developed informal Savings Banks Associations would not only help finance economic development but also contribute to income growth, resulting in the construction of a cohesive economic policy.

 Research questions

This provides the environment that we desperately require, and Nigerians must be encouraged to modify their current attitude about saving.

Customers find commercial bank transaction fees intolerable, pushing some to leave the banking industry and causing institutions and authorities to exert influence on budgetary decisions. Companies and government agencies.

As previously stated, as national policies become more macroeconomic or microcosmic, variables emerge that can influence the economy’s and financial players’ willingness to invest.

 OBJECTIVES OF THE STUDY

In light of the aforementioned issues, the following are the goals of this study project:

To find out what factors influence bank savings in Nigeria.

To identify the numerous erroneous bank charges imposed by Nigerian commercial banks.

Using Union Bank PLC as a case study, estimate the impact of these charges on bank customers’ saving habits.

STATEMENT OF THE HYPOTHESIS

The following hypotheses will be tested in this study:

The first hypothesis;

a. Ho; In Nigeria, union bank charges have no substantial impact on savings.

b. H1; In Nigeria, union bank charges have a substantial impact on savings.

The second hypothesis is that

Ho; bank charges and savings in Nigeria have a good link.

H1; in Nigeria, there is no positive correlation between bank charges and savings.

SIGNIFICANCE OF THE STUDY

Policymakers, particularly those involved in the creation of Nigeria’s economic agenda, will find this study incredibly informative. This will help promote public understanding of various bank charges and the reasons for these costs, as well as assist the public in identifying unfair prices. This will assist them in determining the most appropriate policy in the domain of macroeconomic policy management, particularly those that affect Nigerian savings. Furthermore, the findings and recommendations of this study will raise awareness of the Confederation’s impact in the financial sector or other sectors. The Federal Ministry of Finance and the Central Bank of Nigeria have worked together to enhance Nigeria’s policy, which has had an influence.

 SCOPE AND LIMITATIONS OF STUDY

The goal of this study is to calculate and assess the impact of bank fees on consumer savings habits. Union Bank PLC is used as a case study.

The limitations are limited by a lack of funds, human error, and a short time frame, all of which caused challenges when making a serious attempt to conduct a broad in-depth investigation of this study.

 DEFINITION OF TERMS

A bank is a financial entity that accepts deposits and uses the funds to make loans.

Savings is a term used to describe a fund of money set aside as a reserve.

Bank fees; the cost of doing financial transactions

 Organization of the study

There are five chapters in this research. The general description of the study, the characterization of the problem, the research question, the research aims, and the significance of the investigation are all included in Chapter 1 of the dissertation. The essential bibliographical study on waste management and related concepts is presented in Chapter 2. Chapter 3 focuses on determining the most acceptable research methods for this study, while Chapter 4 examines the data and lessons learned in this field. The facts, conclusions, and recommendations are all summarized in Chapter Five.

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