BANK FAILURE AND ECONOMIC DEVELOPMENT IN NIGERIA: A CRITICAL APPRAISAL

ABSTRACT
Banks occupy the most strategic point in the financial system of the economy.  For a total of banks to between 1992 to 2002 a space of four years, means that somethings definitely is wrong.  Certain question have been asked.  Solutions proffered and prospects for the future explained but none of them seems to have solved the problem. This study is not antagonistic of any other rather it is complementary. Others works have been used here and duly acknowledged but everything is with an intent to find a lasting solution to the issue of bank failure.  The study was based upon data collected through information sifted from books, journals annuals, periodicals.  In conclusion it will be quite expedient to point out that the Nigerian economy is still under developed one and will take the astuteness of every single Nigeria to get it out of the doldrums. It is only when the economy become stable that we shall have a very stable banking environment where failures might not be entirely absent but reduced to rate.  The task is not only for the authorities.  Every one has as a role to play.

CHAPTER ONE
INTRODUCTION
THE BACKGROUND OF THE STUDY
Over the last couple of decades the Nigeria financial system has grown remarkable.  From the almost crude form it was characterized with in pre-colonial and colonial days.  It has become so sophisticated that economic experts today can proudly thump their chests.  With due regard to ownership structure of the institution, the regulatory framework, the instrument employed and number of established institutions, Nigeria can be said to posses the most sophisticated financial system in African. Within the Nigerian financial system itself, the banking institutions have been most remarkable in growth.  This is just as well in any case considering the critical position which they occupy in a complex financial position which they occupy in a complex financial system which supplies the money and credit needs of the economy. The world bank nor banker is nether used nor defined in the central of Nigeria (CBN) Decree No 24 of 1991 nor bank and other financial institutions Decree (BOFIO)No 25 of 1991 but section 2 of Bills of Exchange Act 1881 provides that “bankers include a body of persons whether incorporated or not who carry out the business of banking section 2 (1) of the Evidence Act defines banks banker to means “any person or persons, partnership or company carrying on the business of bankers.  Finally, the Banking Act of 1969, provides that bank means any persons who carries out the business of banking and include a commercial bank and an acceptance house. The role of banks is thus an important one in the process of economic development in the sense that they mobilize funds from the surplus spending and for of the economy.  In this way the increase the quantum of National savings and investment.  Secondly though an appropriate investment multiplier, the volume of good and service produced increase a result of investment projects financed by bank funds.  All of which lead to a successful promotion of an efficient system of payment, creating banking habits, development the society and providing employment opportunities. In view of these highlights, it becomes easily comprehensible why the failure of a bank of a bank has far reaching consequences.

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