AN EXAMINATION OF BANK INSPECTION AS AN EFFECTIVE TOOL IN BANK MANAGEMENT

TABLE OF CONTENT

Title page

Approval page

Dedication

Acknowledgment

Abstract

Table of content

CHAPETR ONE

1.0   INTRODUCTION 

1.1        Background of the study

1.2        Statement of problem

1.3        Research questions

1.4        Objective of the study

1.5        Significance of the study

1.6        Scope of the study

1.7       Definition of terms

CHAPETR TWO

LITERATURE REVIEW

2.1 introduction

2.2 conceptual review

2.3 empirical review

CHAPETR THREE

3.0        Research methodology

3.1    sources of data collection

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5        Validation of research instrument

3.6        Method of data analysis

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS AND INTERPRETATION

4.1 Introductions

4.2 Data analysis

CHAPTER FIVE

5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation

Appendix

 

Abstract

The study focused on the examination of bank inspection as an effective tool in bank management. It adopted a questionnaire-based method of evaluation based on four point likert scale and tested the efficacy of the Hypothesis using the chi-square method. The study revealed that the Bank inspection functions have not been effective in creating stability in the commercial banking system. Bank inspection functions have not been effective in improving Corporate Governance issues in commercial banking system. Bank inspection have not stemmed the incidence of widespread bad loan portfolio in the commercial banking system. Effective inspection would boost the volume and the value of transactions witnessed in commercial banks.

CHAPTER ONE

INTRODUCTION

• Background of the study

The role of banking sector in a develop economy such as ours cannot be over emphasized.  Bank inspection, is the process of monitoring banks to ensure that they are carrying out their activities in a safe and sound manner and in accordance with laws, rules and regulations. It is a means of determining the financial condition and of ensuring compliance with laid down rules and regulations at any given time. Bench (2013) asserts that effective supervision of banks leads to a healthy banking industry. Dimitri (2010) also believes that good regulation and supervision will minimize the negative impact of moral hazard and price shocks on the banking system, thereby leading to a reduction in bank failures and banking system distress. Traditionally, the role of banks whether in a developed or developing economy, consists of financial intermediation, provision of an efficient payments system and serving as a conduit for the implementation of monetary policies. It has been postulated that if these functions are efficiently carried out, the economy would be able to mobilize meaningful level of savings and channel these funds in an efficient and effective manner to ensure that no viable project is frustrated due to lack of funds. Banking regulation was first introduced in Nigeria in the early 1950s in response to the failure of local banks. The 1952 Banking Ordinance imposed minimum requirements for paid up capital and the establishment of reserve funds. This was followed by the enactment of the 1958 Central Bank Act and the Banking Ordinance of 1959. The banking legislation was further strengthened with the enactment of the Banking Decree of 1969. This consolidated previous banking legislation; raised minimum paid up capital requirements and empowered the CBN to specify a minimum capital/deposit ratio (Ekundayo 2014). It also empowered the CBN to impose liquidity ratios and placed restrictions on loan exposure and insider lending (Oloyede 2014). Banking sector forms the life wire of economic growth of any nation.  According to recent publication by an international magazine banking sector contributed about 55% of the total economic development of Nigeria.  Also the development of small and medium scale enterprise cannot be ruled out in this huge success curtained by the banking indicatory. The banking sector in Nigeria comprises the central commercial merchant and development banks etc.  Also inclusive are the community banks which were introduced by the feel government budget of 1990.  The  origin of banking sector dated  back to the early 18th century even through its definition was given in the later part of the 60s  and     thus  definition has to do with the business of  receiving movies from outside sources as deposit with the agreed interstate  granting of deposit with  the agreed interstate granting of loans and acceptance of credits or the  purchase of loans and checks or the purchase and sales of securities for accounts  of  others or the uncurling    of the obligations to acquire claims in respect of loans prior to their maturity or the assumption  of guarantor and other warrantees for  others or the effecting  of transfers and  clearing  and such other transaction as the commission may on recommendation of the central bank by order published the federal gazelle  designated as banking business.  The central  bank of  Nigeria  which is government  charged with the responsibility  of closely monitoring and regulation of the activities of other banks to ensure  that they render service to  their customer in a  manners that is consistent with government  stipulated  rules  and financial policies. The  ensure that these laid down rules and standard are maintained among  other bank and to guarantee  that  depositors  monies are effectively managed  there is the need for inspection and  examination for effective discharge of these functions the inspectorate division of the central bank has adopted an effective internal control procedures in order to  give adequate coverage thorough inspection and examination this defined objective this is enhanced by selecting adequate man-power needs for  this purpose.  In the recent time the comparization and digitalization of various function of banks has helped in a no small measure to curb down the excesses of bank.  Also bank have established internal audit unit (inspectorate divisions) charged with the responsibility of overacting any anomaly transaction based on through inspection and examination of its account on short term basis.

1.2 STATEMENT OF PROBLEMS

Some problems have been identified to have invaded the banking sector and these problem have limited the output of banks thus preventing them from reeling its desired objective.

1. The incident of fraud is prevalent in almost all the bank in Nigeria. These malpractices are now detectable through adequate supervision and examination.
2. The cases of bad and doubt full debt is now very rampant among many commercial bank. This problem is not easily nautical by bank of finical but through effective suppression and examination such evil in the banking sector can be detected easily and arrested.
3. There is very reoccurring problems of bank managers granting loans  above their discretion’s  and power without adequate collateral’s  and this has  resulted in huge losses  to banks and some are the courage of liquidation.  But adequate inspection and examination has provided in elating solution to this ugly trend.
4. The fear of liquidation and frequent rationalization and or retrenchment in banking sector has created fear anxiety and job insecurity workers in the banking sector tend to indulge in many despicable acts to survive these rang days. But through inspection and through examination the problem  can be take of some banks had save several embossing situation emanating from fraudulent practice.

1.3   OBJECTIVE OF STUDY

The purpose and objective for which thus study was designed to achieve are here under stated as follows.

1. To identify how inspection and examination can be of assistance towards effective management of banking sector.
2. to ascertain if there is any significant relationship between bank inspection and loan management process in banks.
3. To inform bank management though inspection and examination ill efficacy of their banking system and operations and recommend possible are as of change.
4. To cheek and examine how bank management grant loans over their power limit or discretion as approved by the management.

1.4 RESEARCH QUESTION

The following research questions were formulated by the researcher to aid the completion of the study;

1. Does bank inspection aid in effective management of deposit money banks and the banking sector?
2. Is there any significant relationship between bank inspection and loan management process in banks?

• Does bank inspection aid in curtailing the inefficacy of the banking system and management flaws?

1. Does bank management grant loans over their power limit or discretion as approved by the management?

1.5 RESEARCH HYPOTHESES

The following research hypotheses were formulated by the researcher to aid the completion of the study;

H₀: There is no significant relationship between bank inspection and loan management process in banks

H₁: There is a significant relationship between bank inspection and loan management process in banks

H₀: Bank inspection does not aid in curtailing the inefficacy of the banking system and management flaws

H₂: Bank inspection does aid in curtailing the inefficacy of the banking system and management flaws

1.6 SIGNIFICANCE OF THE STUDY

It is believed that at the completion of the study, the findings will be of great importance to the management on Nigerian banks in curtailing the menace of mismanagement in the banking industry there by enhancing profitability, the study will also be of significance to bank customers as the findings of the study if applied will help the bank operation and customers relationship to be more transparent. The study will also be of importance to researchers who intend to embark on a study in a similar topic as the study will serve as a reference point to further study. Finally, the study will be of significance to student, teachers, pupil, lecturers, academia’s, and the general public as the study will contribute to the pool of existing literature on the subject matter and also contribute to knowledge.

1.7 SCOPE AND LIMITATION OF THE STUDY

The scope of the study covers an examination of bank inspection as an effective tool in bank management. In the course of the study, there are some factors that limited the scope of the study which where beyond the researchers control;

AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study

TIME: The time frame allocated to the study does not enhance wider coverage as the researcher have to combine other academic activities and examinations with the study.

FINANCE: The finance available for the research work does not allow for wider coverage as resources are very limited as the researcher has other academic bills to cover.

1.8 OPERATIONAL DEFINITION OF TERMS

Loan

This is a sum of money tent to the government domestic and foreign lending or being lent.

Budget

Is an estimate of problem future income and expenditure that made by a government similar estimate made by a business company.

Gazette

Official periodicals with legal notices news of appointment promotions of   officers and officials.

Cheques

Is an order in writings drawn on a bank and payable on demand

Examination

It examining or being examined it was found that the signature was not genuine the prisoner is still under being examined.

 

1.9 ORGANIZATION OF THE STUDY

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), statement of problem, objectives of the study, research question, significance or the study, research methodology, definition of terms and historical background of the study. Chapter two highlight 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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