DISTRESS IN THE NIGERIAN FINANCIAL INDUSTRY: AN EMPIRICAL ANALYSIS
DISTRESS IN THE NIGERIAN FINANCIAL INDUSTRY: AN EMPIRICAL ANALYSIS
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Date
1999-11
Authors
ASH-LAFIAGI, Abu-Bakrin Sha'aba Hassan
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Abstract
The history of financial industry (banking) dates back to the colonial era
when the African Banking Corporation (ABC) was established in 1892, to distribute
currency notes of the Bank of England for the British treasury. The development of
this ABC or what was later on called British Bank for West Africa (BBWA) by
1894, later became Standard (SB) and subsequently First Bank of Nigeria (FBN) to
date, was informed by the colonial entrepreneurs who needed banking services to
back their trade transactions in Africa. And in the same vein, to address the credit
needs of antagonist, Nigerians later ventured into banking business initially through
private individual initiatives and later through government policy.
Problem of distress in the Nigerian financial industry (banking) as well as
outright bank failure dates back to 1930, when the first bank failure was reported.
Indeed between 1930 and 1958 when the Central Bank of Nigeria (CBN) was
established are twenty-one (21) bank failures were reported or recorded. However
the degree of intensity and scope of the distress has never been as serious as has
been observed since June 1989 when government and other public sectors deposits
were withdrawn from commercial banks to Central Bank, in government's bid to
deregulate the economy under Structural Adjustment Programe (SAP). This
directive, exposed the weak financial conditions of most of these banks, thus
increasing the number of distressed banks, and the severity of the distressness. This
distressed condition has been traced to a wide range of causes some of which
include, macro-economic shocks/instability, effects of financial reforms, changes in
prudential regulations and how the authorities of the affected countries respond to
crises, as does Nigerian authorities.
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Since 1987 when the then government initiated a wide range of reforms
aimed at promoting efficiency in the Nigerian financial industry, various write-up by
the relevant supervisory and regulatory agencies (CBN/NDIC) were collected and
analysed for this study. That is both CBN/NDIC quarterly and economic review
publications, journals and some public dailies (newspapers) were the sources and
methods used in bringing out this study right from 1989 to date. All these materials
are what constitute secondary data that make possible the compilation.
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Description
BEING THESIS SUBMITTED TO POSTGRADUATE
SCHOOL, AHMADU BELLO UNIVERSITY, ZARIA IN
PARTIAL FULFILLMENT FOR THE AWARD OF
MASTER OF BUSINESS ADMINISTRATION (M.B.A.)
DEGREE
NOVEMBER 1999
Keywords
DISTRESS,, NIGERIAN FINANCIAL INDUSTRY,, EMPIRICAL ANALYSIS