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THE ROLE OF FINANCIAL INSTITUTION IN THE DEVELOPMENT OF NIGERIA ECONOMY

CHAPTER ONE

INTRODUCTION

BACKGROUND TO THE STUDY

A financial institution is one whose asset portfolios are primarily comprised of claims rather than inventory, plant, and equipment. In the financial markets, financial institutions act as mediators.

However, because the banking sector will be emphasized as a financial entity. It is necessary to explain what the banking sector is and what role it plays in the development of the Nigerian economy at current time.

In the sense that it is responsible for allocating cash to various sectors and sub-sectors of the economy, the banking industry is extremely important to any country’s economic progress.

In the sense that it is responsible for allocating cash to various sectors and sub-sectors of the economy, the banking industry is extremely important to any country’s economic progress. Agriculture, manufacturing, mining, construction, transportation, and tourism are just a handful of these industries. The current economic crisis in Nigeria is causing widespread worry, prompting the Federal Government to take a variety of measures to save the economy from catastrophic collaps

The dynamics of supply and demand are determining the implementation of economic measures such as privatization of government parastatals, the Foreign Exchange Market, and then the fate of the Naira. And the structural alterations were planned. All of these tasks are aided.

The recent increase in the number of commercial and merchant banks in the country, in order to meet the growing demand for business financing and other financial services, has necessitated a closer examination of the activities of this industry, as well as its relevance, in order to explain its critical role in Nigeria’s economic development.

A bank is primarily a financial entity that houses money and other valuables such as gold, certificates, wills, and stock certificates, to name a few. However, in modern banking, this function has been expanded and clearly transformed. As a result, modern banking would be redefined as the art of storing, exchanging, lending, and borrowing, as well as providing consulting services to everybody.

Banks are the most crucial points on which the economy’s wheel spins in general. In developed economies such as the United States and the United Kingdom,

Banks in Canada undertake extra operations such as setting and clearing daily credit purchase cards and night saving accounts, which are not available in Africa’s underdeveloped countries.

 

In Nigeria, our banks are performing an increasing number of functions. Accepting deposit account holders, giving loans and advances, foreign exchange, discounting bills of exchange, loan syndication, equipment leasing, and completing mergers and acquisitions are all examples of this. Also banks offer financial advice to numerous customers.

 

Financing developmental projects, issuance of letter of credit to their customer, acting as Trustees and Executors

PROBLEM OF STUDY

When the economy is in a slump, as it is in Nigeria, A lot of problems are preventing banks from carrying out their rates in reviving the economy. One of their biggest problems is the long-overdue repayment of previous loans and advances to the public sector.

The amount owed to the banks by various state governments and their agencies was estimated to be N23.5 billion at the end of 1991.

As of 2011, the total value of the company was N34.6 billion. Credit to state governments for direct payment of salary and other emoluments to their personnel, as well as credit extended to governments and their agencies for funding various projects, accounted for a significant share of these loans.

In addition to their direct lending to the government and their direct lending to the private sector,

PURPOSE OF STUDY

It has been speculated that financial institutions are not interested in helping the economy recover, but rather in making profits, enormous profits that are meant to be reinvested in the economy but are not.

The goal of this study, which focuses on the banking industry, is to determine the actual roles performed by banks in the current status of the economy, and to determine if these roles are effectively developing the economy. In addition to direct lending to the government and its agencies, banks have given large loans to many contractors who had previously worked for the government and its agencies but had yet to be paid for such projects or other jobs. Although there have been significant gains in the payback and saving of these past-due loans and advances, the amount of progress the banks can make is still determined by what remains outstanding. By recycling lending into more productive industries, the nation’s economy can be sustained. There is still a dearth of general public understanding regarding the securities business in this capital market. In the eyes of the average population, the is surrounded with mystery. Furthermore, there is a large gap between demand and supply of securities, as many indigenous enterprises are wary of going public, primarily due to a fear of losing control.

SCOPE OF STUDY

Because of the greater role played by financial institutions in implementing government policies aimed at developing the Nigerian economy, and because the banking sector touches every sector of the Nigerian economy, it is important to confine the study of the banking industry to the insurance industry, the Nigerian Stock Exchange, and a few other financial institutions.

LIMITATION OF STUDY

In reality, no one can confidently proclaim or give a time picture of what the future holds for him, although one can do so to some level based on one’s prior experiences and current situation. In light of the foregoing, the researcher might assert the following constraint that is likely to be encountered during the research:

TIME RESTRICTIONS

To be more exact, time is never enough because each study project is predicated on discovering facts about which all current changes are known. Most essential, changes occur on a daily basis.

RESTRICTIONS ON FINANCIAL RESOURCES

Another barrier is that it costs a lot of money to conduct research – transportation, typing, and binding, to name a few.

COVERAGE ON A GEOGRAPHICAL LEVEL

Because both are used in executing the latter, the above-mentioned tum constraints have an impact on the geographical coverage of this study. Furthermore, some Nigerian economies cover the entire country; there will be insufficient time or funds to cover all of the country’s geographical regions. In light of the foregoing, the research will be conducted in Lagos.

HISTORICAL BACKGROUND OF WEMA BANK PLC

Wema Bank PIc, formerly known as Agbonmagbe Bank Limited, is a commercial banking company that was established in 1945 as a private limited liability financial firm.

The bank, which started small, currently has over 154 branches in Nigeria’s major cities. It also has a strong presence in the world’s financial center, allowing it to provide quick and efficient banking services both within and beyond Nigeria. The bank’s operations are governed by a general policy developed and authorized by the board of directors, which includes operational, accounting, lending, and expansion rules.

In recent years, the company has experienced great growth in all areas of its activities.

Statutory corporations, agriculturists, state and municipal governments, commercial houses, industrialists, and a cross-section of the general public have all benefited from the company’s spectacular growth. The bank is currently led by a vibrant and dynamic board of directors, whose future development is in their hands.

The interaction of actual aesthetic beauty and value shows the originality in the entire design of Wema Bank, Urban, Semi-Urban, and Rural branches, separate from the bank’s demand for robust and functioning physical construction.

The bank’s branches in Apata, Tponri, Edun-Abon Mokola, Olubadan, Dopemu, Ondo Town, and a number of other locations are only a few examples of its architectural design distinctiveness.

At a time when computer technology is being introduced as a means of improving the banking industry’s quality and fats service. Wema Bank’s Head Office Account and a larger number of its branches have been effectively computerized.

The few surviving branches have already been digitized with details comprehensive blueprints.

This is not only in line with modern banking requirements; it also reflects their goal to provide services with little delay in a rather friendly setting.

A strategic business unit has also been established with the goal of planning for the bank’s future as well as keeping it afloat in the country’s current difficult economic situation.

The corporate ambitions of Wema Bank are propelled by the ever-intriguing need to consolidate.

Services in the Financial Sector:

Overdraft

Short- and medium-term loans are available.

Commercial Papers/Bankers Acceptance

Guarantees

Discounting of bills

Services that deliver results

Services for Corporations:

 

• Loan syndication participation

 

• Finance for international trade

 

• Finance for exports

 

• Leasing of equipment

 

• Increase the number of corporate clients

 

Advisory Services in Finance:

 

• Bank customers are also entitled to free business advisory services.

 

Financial Services on the International Level:

 

• Trade transaction that goes unnoticed (i.e. buying and selling of foreign currencies, personal home remittances).

 

• Transactions are shown on the track

 

• Services for export.

 

 

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