THE ROLE OF

FINANCIAL

INSTITUTION IN

ENHANCING

BUSINESS

ACTIVITIES IN

NIGERIA

1
A RESEARCH PROJECT WRITTEN IN THE DEPARTMENT

OF ACCOUNTANCY, SCHOOL OF FINANCIAL STUDIES.

SUBMITTED

IN PARTIAL FULFILMENT FOR THE AWARD OF

NATIONAL DIPLOMA (ND) IN ACCOUNTANCY.

NOVEMBER 2009

COLLEGE OF ACCOUNTANCY AND COMPUTER

TECHNOLOGY

BLOCK B, FLAT 8, MASOJE ESTATE.

P.T.I ROAD, EFFURUN. DELTA STATE. NIGERIA.

2
 APPROVAL

We the undersigned hereby certify that this project was carried

out by SUNDAY EFFIONG JONAH in the department of

accountancy, school of financial studies Akwa Ikwa Ibom State.

We also certify that the work is adequate in scope and quality

in partial fulfilment for the award of National Diploma (ND) in

accountancy .

Date
Project Supervisor
3
Center co-ordinator Date

DEDICATION

This project work is dedicated to the Almighty God who gives

wisdom for academic excellent, and to my beloved parent who

did not deprive me from benefiting and having the light of

education.

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 ACKNOWLEDGMENT

I am most grateful to the Almighty God for giving me life,

strength and courage to sail through my educational career

despite all odds and obstacles.

In writing this project, I am indebted to Idowu Mohammed,

Tunde Bamboge for their contributions; support and

encouragement in making this project work a success.

I will like to use this opportunity to express my sincere thanks

to Comfort Umoren, brothers and sisters, relatives, friends and

loved ones for their prayers, moral and financial support

through this program.

My profound gratitude goes to my Supervisor Mr Emmanuel

N. Bassey who despite his crowded schedule, sacrificed time

to read through the manuscript without which this project

would not have seen the light of the day.

My special thanks also goes to my beloved Mrs Peters, Uche

Gunida for their advice, encouragement and assistance.

In like manner, I wish to acknowledge the effort of all my

lecturers in accounting department for their principal

knowledge imparted on me during my period of study.

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With special thanks to aunty, my Pastor Kola for his endless

love shown to me during the course of my studies.

Finally, thanks to others I cannot remember during the course

of the write up, may God reward every effort of kindness and

love shown during my academic pursuit.

ABSTRACT

Financial institutions provide service as intermediaries of the

capital and debt markets. They are responsible for transferring

funds from investors to companies, in need of those funds. The

presence of financial institutions facilitate the flow of money

through the economy. To do so, savings are pooled to mitigate

6
the risk brought to provide funds for loans. Such is the primary

means for depository institutions to develop revenue. Should

the yield curve become inverse, firms in this arena will offer

additional fee-generating services including securities

underwriting, and prime brokerage.

TABLE OF CONTENT

Title page - - - - - - - - i

Approval - - - - - - - - ii

Dedication - - - - - - - - iii

Acknowledgement - - - - - - - iv

Abstract - - - - - - - - - vi

Table of content - - - - - - - vii

CHAPTER ONE – INTRODUCTION

1.0 Background of the study - - - -- 1

1.2 Statement of the problem - - - - 9

1.5.0 Limitation of the study - - - - 10

1.5.1 Material procurement - - - - - 11

1.5.2 Time constraints - - - - - - 11

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1.5.3 Financial constraints - - - - - 11

1.6.0 Hypothesis - - - - - - - 11

1.7 Objectives of the study - - - - - 12

1.8 The structure of the work - - - - 12

CHAPTER TWO – LITERATURE REVIEW

2.1 The roles of institutions in the financial system 13

2.3 Important factors in building

a stable financial system - - - - 14

2.4 Duties of banks - - - - - - 17

2.5 Data about sterling bank plc - - - - 25

CHAPTER THREE

RESEARCH METHODOLOGY AND DESIGN

3.1 Introduction - - - - - - 26

3.2 Research methodology - - - - - 26

3.3 Research design - - - - - - 27

3.4 Sources of data - - - - - - 27

3.5 Secondary data - - - - - - 27

3.6 Population description - - - - - 28

3.7 Sample size - - - - - - - 28

3.8 Instruments for data collection - - - 29

3.9 Field work - - - - - - - 29

3.6 Descriptions of data

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 presentation and analysis tools - - - 30

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 Introduction - - - - - - - 31

4.2 Data presentation - - - - - - 32

4.3 Cross-tabulated analysis - - - - - 33

4.5 Software used for data analysis - - - 40

CHAPTER FIVE

FINDINGS AND CONLUSION

5.1 Findings - - - - - - - 44

5.2 Conclusions- - - - - - - 44

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 CHAPTER ONE

INTRODUCTION

1.0 BACKGROUND OF THE STUDY

In financial economics, a financial institution is an institution that

provides financial services for its clients or members. Probably the most

important financial service provided by financial institutions is acting as

financial intermediaries. Most financial institutions are highly regulated by

government bodies.

Banks and other Financial Institutions Decree 1991. Laws of the

Federation of Nigeria

(1) The Central Bank of Nigeria (hereafter in this Decree referred to as "the Bank") shall

have all the functions and powers conferred and the duties imposed on it by this

Decree.

(2) The Bank shall in addition to the functions and powers conferred on it by this Decree,

have the functions and powers conferred and the duties imposed on the Bank by the

Central Bank of Nigeria Decree 1991.

(3) The Bank may authorise or instruct any officer or employee of the Bank to perform

any of the functions, exercise any powers, or discharge any of its duties under this Decree.

(4) The Bank may, either generally or in any particular case, appoint any person who is

not an officer or employee of the Bank, to render such assistance as it may specify in the

exercise of its powers, the performance of its functions, or the discharge of its duties under

this Decree, or to exercise, perform or discharge the functions and duties on behalf and in the

name of the Bank.

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 (5) For the purposes of this Decree, a person shall be deemed to be receiving money as

deposits -

(a) if the person accepts deposit from the general public as a feature of its business or if it

issues an advertisement or solicits for such deposit;

(b) notwithstanding that it receives moneys and deposits which are limited to fixed

amounts or that certificates or other instruments are issued in respect of any such

amounts providing for the repayment to the holder thereof either conditionally or

unconditionally of the amount of the deposits at specified or unspecified dates or for

the payment of interest or dividend on the amounts deposited at specified intervals or

otherwise, or that such certificates are transferable.

(6) Notwithstanding anything contained in this section to the contrary, the receiving of

moneys against any issue of shares and debentures offered to the public in accordance

with any enactment in force within the Federation shall not be deemed to constitute

receiving moneys as deposits for the purposes of this Decree.

2. (1) No person shall carry on any banking business in Nigeria except it is a

company duly incorporated in Nigeria and holds a valid banking licence issued under

this Decree.

(2) Any person who transacts banking business without a valid licence under this Decree is

guilty of an offence and liable on conviction to a term of imprisonment not exceeding

10 years or a fine exceeding N500,000 or to both such imprisonment and fine.

3. (1) Any person desiring to undertake banking business in Nigeria shall apply in

writing to the Governor for the grant of a licence and shall accompany the application

with the following-

(a) feasibility report of the proposed bank;

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 (b) a draft copy of the memorandum and articles of association of the proposed

bank;

(c) a list of the shareholders, directors and principal officers of the proposed

bank and their particulars;

(d) the prescribed application fee; and

(e) such other information, documents and reports as the Bank may, from time

to time, specify.

(2) After the applicant has provided all such information, documents and report as the

Bank may require under subsection (1) of this section, the shareholders of the proposed

bank shall deposit with the Bank a sum equal to the minimum paid-up share capital that

may be applicable under section 9 of this Decree.

(3) Upon the payment of the sum referred to in subsection (2) of this section, the Governor

may issue a licence with or without conditions or refuse to issue a licence and the

Governor need not give any reasons for the refusal.

(4) Where an application for a licence is granted, the Bank shall give written notice of that

fact to the applicant and the licence fee shall be paid.

4. The Bank may invest any amount deposited with it pursuant to section 3(2) of this

Decree in treasury bills or such other securities until such a time as the Governor shall

decide whether or not to grant a licence, and where the licence is not granted the Bank

shall repay the sum deposited to the applicant, together with the investment income

after deducting administrative expenses and tax on the income.

5. (1) Except as provided in section 9(2) of this Decree, the Governor may vary or

revoke any condition subject to which a licence was granted or may impose fresh or

additional conditions to the grant of a licence.

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 (2) Where the grant of a licence is subject to conditions, the bank shall comply

with those conditions to the satisfaction of the Bank within such period as the Bank

may deem appropriate in the circumstances.

(3) Any bank which fails to comply with any of the conditions of its licence is guilty of an

offence under this section and shall be liable on conviction to a fine not exceeding

N1,000 for each day during which the condition is not complied with.

(4) Where the Governor proposes to vary, revoke or impose fresh or additional conditions

on a licence, he shall, before exercising such power, give notice of his intention to the

bank concerned and give the bank an opportunity to make a representation to him

thereon.

(5) Any bank which fails to comply with any fresh or additional condition imposed in

relation to its licence is guilty of an offence and liable on conviction to a fine of

N100,000 and where the offence continues, to an additional fine of N1,000 for each day

during which the offence continues.

6. No bank may open or close any branch office anywhere within or outside Nigeria

except with the prior consenting writing of the Bank.

7. Except with the prior consent of the Governor, no bank shall enter into an agreement or

arrangement-

(a) which results in a change in the control of the bank;

(b) for the sale, disposal or transfer howsoever of the whole or any part of the

business of the bank;

(c) for the amalgamation or merger of the bank with any other person;

(d) for the reconstruction of the bank;

(e) to employ a management agent or to transfer its business to any such agent.

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8. (1) Except with the approval of the Bank, no foreign bank shall operate a

representative office in Nigeria.

(2) Any person who contravenes subsection (1) of this section or section 7 of this

Decree is guilty of an offences and liable on conviction to a fine of N100,000 and

in the case of a continuing offence to an additional fine of N10,000 for each day

during which the offence continues.

9. (1) The President on the recommendation of the Bank shall, from time to time,

determine, as he may deem appropriate, the minimum paid-up share capital of each

category of banks.

(2) Subject to subsection (1) of this section, the minimum paid-up share capital of a bank

shall in respect of-

(a) a commercial bank, be N50,000,000;

(b) a profit and loss sharing bank, be N50,000,000;

(c) a merchant bank, be N40,000,000;

(d) a community bank, be N250,000.

(3) Any failure to comply with the provisions of this section within 12 months from the

date of this Decree shall be a ground for the revocation of any licence issued pursuant

to the provisions of this Decree or any other Act repealed by it.

10. Notwithstanding the provisions of the Companies and Allied Matters Decree 1990 or

any agreement or contract, the voting rights of every shareholder in a bank shall be

proportional to his contribution to the paid-up share capital of the bank.

11. Notwithstanding anything contained in any law or in any contract or instrument, no suit

or other proceeding shall be maintained against any person registered as the holder of a

14
 share in a bank on the ground that the title to the said share vests in any person other

than the registered holder:

Provided that nothing in this section shall bar a suit or other proceeding on

behalf of a minor or person suffering from any mental illness on the ground that

the registered holder holds the share on behalf of the minor or person suffering

from the mental illness.

12. The Governor may, with the approval of the President by notice published in the

Gazette, revoke any licence granted under this Decree if a bank-

(a) ceases to carry on in Nigeria the type of banking business for which the

licence was issued for any continuous period of 6 months or for any period

aggregating 6 months during a continuous period of 12 months;

(b) goes into liquidation or is wound up or otherwise dissolved;

(c) fails to fulfill or comply with any condition subject to which the licence

was granted;

(d) has insufficient assets to meet its liabilities;

(e) fails to comply with any obligation imposed upon it by or under this Decree

or the Central Bank of Nigeria Decree 1991.

13. (1) A bank shall maintain; at all times, capital funds unimpaired by losses, in such

ratio to all or any assets or to all or any liabilities or to both such assets and liabilities of

the bank and all its offices in and outside Nigeria as may be specified by the Bank.

(2) Any bank which fails to observe any such specified ratios may be prohibited by the

Bank from-

(a) advertising for or accepting new deposits;

(b) granting credit and making investment;

15
 (c) paying cash dividend to shareholders;

(3) In addition, the bank may be required to draw up within a specified time a

capital reconstitution plan acceptable to the Bank.

14. (1) Failure to comply with the provisions of section 13 of this Decree may

constitute a ground for the revocation of the licence of the bank under this Decree.

(2) Where the Bank proposes to recommend to the President, the revocation of the licence

of any bank pursuant to subsection (1) of this section, the Bank shall give notice of its

intention to the bank and the bank may within 30 days make representation (if any) in

respect thereof.

(3) Any bank dissatisfied with the decision of the Bank to recommend the revocation

of its licence under this section may, within 14 days of the decision being

communicated to it, appeal against such decision through the Bank to the

President.

(4) The President may reject or approve the recommendation of the Bank with such

modification as he may deem fit.

15. (1) Every bank shall maintain with the Bank cash reserves, and special deposits

and hold specified liquid assets or stabilisation securities, as the case may be, not less in

amount than as may, from time to time, be prescribed by the Bank by virtue of section

39 of the Central Bank of Nigeria Decree 1991.

(2) Where both assets and liabilities are due from and to other banks, they shall be offset

accordingly, and any surplus of assets or liabilities shall be included or deducted, as the

case may be, in computing specified liquid assets.

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 (3) In the case of the long-term advances to a bank or by an overseas branch or office

of a bank, the advances may, with the approval of the Bank, be excluded from the

demand liabilities of the bank.

(4) Every bank shall -

(a) furnish within a reasonable time any information required by the Bank to

satisfy the Bank that the bank is observing the requirements of subsection

(1) of this section;

(b) not allow its holding of cash reserves, specified liquid assets, special

deposits and stabilisation securities to be less than the amount which may,

from time to time, be prescribed by the Bank;

(c) not during the period of any deficiency grant or permit increases in

advances, loans or credit facilities to any person without the prior approval

in writing of the Bank.

(5) Any bank which fails to comply with any of the provisions of subsection (4) of

this section is guilty to an offence and liable on conviction to a fine of-

(a) in the case of paragraph (a) N50,000 for every day during which a default

under that paragraph (a) exists;

(b) in the case of paragraph (b), one per cent of the shortfall for each day

during which the deficiency under that paragraph exists;

c) in the case of paragraph (c), N500,000 for every offence under that

paragraph;

and the Bank may also, during the period when the bank fails to comply with any

of the requirements of subsection (4) as aforesaid, withdraw any privileges or

facilities that are nor accorded to the bank.

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 (6) For the purposes of this section, specified liquid assets provided they are freely

transferable and free from any lien or charge of any kind shall, without prejudice to the

provisions of section 39 of the Central Bank of Nigeria Decree 1991, consist of all or

any of the following, that is-

(a) currency notes and coins which are legal tender in Nigeria;

(b) balances at the Bank;

(c) net balances at any licensed bank (excluding uncleared effects) and money

at call in Nigeria;

(d) Treasury Bills and Treasury Certificates issued by the Federal Government;

(e) inland bills of exchange and promissory notes rediscountable at the Bank;

(f) stocks issued by the Federal Government with such dates of maturity as

may be approved by the Bank;

(g) negotiable certificates of deposit approved by the Bank; and

(h) such other negotiable instruments as may, from time to time, be approved

by the Bank for the purpose this subsection.

1.2 STATEMENT OF THE PROBLEM

In this research project, effort will be made:

1. To determine the role of financial institution in Nigeria.

2. To investigate the role financial institution is playing in enhancing

business transaction in the country.

3. To examine various types of financial institutions available in Nigeria.

4. To investigate the vibrant financial institution

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 5. To find out what are the possible means curbing financial distress in

the country.

1.4 SIGNIFICANCE OF THE STUDY

The significance of the study are many, but the following points are worthy of

mentioning.

a. the findings of the study will shed more light on combating distress

among the financial institutions in Nigeria

b. the study will lead to a deeper understanding of various types of financial

institutions in the country

c. the findings of the research will serve as decision variables or input for

managers, bankers and government agents.

d. the policy makers and professionals in the relevant fields will find the

research work useful for their policy making.

e. the study will create more awareness in the minds of its readers, about the

financial and none financial institutions available.

f. the study will serve as reference material to students of finance,

accountancy, business management, banking and economics, who may desire

an in-depth knowledge of the online business transaction and its implications.

g. it will be of a great benefit to the scholars and other researchers alike by

serving as a reference material when need arises.

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1.5.0 LIMITATION OF THE STUDY

A research work of this nature cannot come to an end without limitation. The

researcher encountered numerous problems, which affected the smooth running

of the work. These problems include, difficulty in procuring materials for the

project, time factor and financial constraints

1.5.1 MATERIAL PROCUREMENT

There was a lot of constraints as to getting information and materials for the

job. The researcher made series of consultations and visit to most renowned

institutions to acquire the needed information. Most materials used were very

difficult to come by, as there is no library with the town.

1.5.2 TIME CONSTRIANTS

Combining academic work with circular job is no doubt a thought provoking

issue, as it has to do with time. Actually, a lot of time was wasted as the

research visited the organisations and individuals together with government

agencies to obtain valuable information for the project.

1.5.3 FINANCIAL CONSTRAINTS

The researcher would have obtained more information than what is obtainable

here but due to lack of money to visit some of the firms and government

agencies located a bit further from the researcher place of resident.

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1.6.0 HYPOTHESIS

A hypothesis is a conjectural or tentative statement of the relationship between

two or more variables (Agbadudu).

In this research project, two hypotheses are to be tested as follows; that the

proportion of respondents that said yes is 90% when asked.

(1) If it is possible to combat financial distress in the country .

(2) If "banking business" means the business of receiving deposits on current and savings

accounts,

1.7 OBJECTIVES OF THE STUDY

The salient objectives of the research were the following among others:

a. to carry out an investigation on role of financial institutions

b. to empirically find out the major roles played by banking institutions in

combating this societal illness.

c. to really find out the various types of financial institutions in the country

d. To determine the benefits that business organisations, banks and

government agencies stand to gain in taking charge and in solving the

online problem.

1.8 THE STRUCTURE OF THE WORK

This research work is to be organized in five chapters as follows:

1. Introduction

2. Review of Related Literature

3. Research Methods and Procedures

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 4. Data presentation and Analysis and

5. Findings, Summary and Conclusion

CHAPTER TWO

LITERATURE REVIEW

2.1 The role of institutions in the financial system

The highly justifiable focus on banks as financial institutions stems from their

fundamental role in liquidity redistribution and maturity transformation, the

implementation of monetary policy, in operating payment systems and in providing

appropriate channels for national and international financial flows, which contribute

to the overall development of the economy.

The experience from the restructuring process has shown that the strengthening of

domestic financial markets is strongly dependent on the efficiency of the banking

sector. The development of viable capital markets can only take place once the

privatisation of large state-owned banks, deregulation and liberalisation of domestic

banking markets have paved the way for more efficient financial intermediation.

2.2 FINANCIAL INSTITUTIONS IMPACT ON ECONOMIC GROWTH

First, on the nexus between economic growth and financial intermediation, a large

body of academic research across many countries has demonstrated the important

role that a highly developed banking sector and capital market have to play in

facilitating economic growth. Well developed financial systems allow economies to

reach their potential since they allow firms which have successfully identified

profitable opportunities to exploit these opportunities as intermediaries by

channelling investment funds from those in the economy who are willing to defer

their consumption plans into the future.

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In general, economic growth depends on the accumulation of input factors in the

production process and on technical progress. Seeing capital and capital

accumulation as an important input factor, financial development is linked most

clearly to this source of growth. Financial development may also help to realise

faster technical progress, embedded in the capital stock, to achieve higher economic

growth.

More specifically, financial development can affect growth through three main

channels: (i) it can raise the proportion of savings channelled to investment, thereby

reducing the costs of financial intermediation; (ii) it may improve the allocation of

resources across investment projects, thus increasing the social marginal

productivity of capital; and (iii) it can influence the savings rates of households, for

example, if it induces a higher degree of risk sharing and specialisation, which as a

result stimulates higher growth.

There is clear evidence of stronger growth in those countries which are

characterised by a good legal structure. This may lower both information costs (e.g.,

through verifying the quality of disclosure of companies' accounts) as well as

transaction costs (e.g., through the better legal enforcement of contracts) for a

supplier of funds, such as banks. Furthermore, when banks are allowed to be active

in a wide range of activities, such as in the securities, insurance, or real estate

markets, and when banks can own or control non-financial firms, or vice versa, credit

may be better allocated and/or more credit may be available to entrepreneurs.

2.3 IMPORTANT FACTORS IN BUILDING A STABLE FINANCIAL SYSTEM

Most generally, a stable financial system can be described as a financial system

that is able to withstand shocks without giving way to cumulative processes which

23
could impair the allocation of savings to investments and the processing of payments

in the economy. How do we get there?

1. First, financial system architecture should be carefully planned. Different

stages of financial development require adequate institutional processes to be in

place. Here, one can refer to the sequencing laid out by IMF in recent years and

to the European experience with opening and gradually liberalising the financial

sector during the 1980s and 1990s.

2. Second, a solid micro supervision of the financial sector and individual

institutions should be in place.

3. Third, close co-operation and exchange of information between the central

bank and supervisory authorities is warranted at all times and especially in

periods of financial stress. I will refer to this more extensively in a moment.

4. Fourth, there are several, complementary public policies that are typically

needed to sustain or build up confidence in financial institutions. Let me mention:

• Fiscal policy. If fiscal authorities, as in the euro area, are restricted in their

ability to run deficits or accumulate large debts, an important source of financial

market stress and financial instability is removed.

• Monetary policy. As is now widely accepted, monetary authorities should in

the first place try to guarantee price stability, being the best possible contribution

it can make to growth in the medium to long-term. Indirectly, this should also be

conducive to supporting financial stability, as the economy will have less macro

uncertainties to deal with, when allocating resources. However, it goes without

saying that the central bank should take an active interest in monitoring financial

24
 sector developments, given the importance of the sector, also from a monetary

policy (transmission) perspective, and given its importance in the economic

system (intermediation between lenders and borrowers). In some cases, when

financial stability is threatened, monetary policy may be used as a tool to support

the financial sector. This support may come not only through interest rate policy,

but also and most powerfully through the central bank's role as a lender of last

resort, that is, in providing final liquidity when solvent commercial banks suffer

liquidity strains. In addition, some day-to-day tools are associated with

guaranteeing financial sector stability, as for example the lending and deposit

facilities at the central bank providing upper and lower bounds for money market

fluctuations and giving individual institutions a means to deal with end-of-day

liquidity imbalances, or fine-tuning operations. Similarly, public commenting or

private persuasion of market participants can at times be used for maintaining

public confidence in the banking sector.

• Financial supervision. An adequate supervisory framework, as I will explain

later, helps to enhance financial stability and maintain overall confidence in the

financial system.

• A financial safety net is in place in most countries with a view to protecting

small depositors in case of a bank failure. This system seems to work relatively

well in maintaining confidence in financial institutions.

Of course, a stable financial system cannot operate without market discipline of the

financial sector. In order to avoid costly bank runs and bank failures, the sector must

show some self-discipline, to meet acceptable standards and expectations of

shareholders. Banks should be able to show good performance, adopt a sound risk

25
management system and adhere to adequate corporate governance rules. In case of

deteriorating results, prompt corrective actions should be taken and announced to

the public, in order not to lose its credibility. As an external watchdog, rating

agencies provide a valuable service by monitoring the financial sector and designing

a rating system, which reflect the institution's capacity to service its debts. This has,

at times, proven to be a valuable tool to distinguish sound from unhealthy

institutions.

2.4 DUTIES OF BANKS

(1) Every bank shall maintain a reserve fund and shall, out of its net profits for each year

(after due provision made for taxation) and before any dividend is declared, where the

amount of the reserve fund is-

(a) less than the paid-up share capital, transfer to the reserve fund a sum equal not

less than thirty per cent of the net profits; or

(b) equal to or in excess of the paid-up share capital, transfer to the reserve fund a

sum equal to not less than fifteen per cent of the net profit:

Provided that no transfer under this subsection shall be made until all identifiable

losses have been made good.

(2) Any bank which fails to comply with the provisions of subsection (10 of this section is

guilty of an offence and liable on conviction to a fine of N500,000.

(3) Notwithstanding paragraphs (a) and (b) of subsection (10 of this section, the Bank

may, from time to time, specify a different proportion of the net profits of each year, being

either lesser or greater than the proportion specified in paragraphs (a) and (b) to be

transferred to the reserve fund of a bank for the purpose of ensuring that the amount of the

reserve fund of such bank is sufficient for the purpose of its business and adequate in relation

to its liabilities.
26
 17. No bank shall pay dividend on its shares until-

(a) all its preliminary expenses, organisational expenses, shares selling commission,

brokerage, amount of losses incurred and other capitalised expenses not represented

by tangible assets have been completely written off;

(b) adequate provisions have been made to the satisfaction of the Bank for actual and

contingent losses on risk assets, liabilities, off balance sheet commitment and such

unearned incomes as are derivable therefrom;

(c) it has complied with any capital ration requirement as specified by the Bank pursuant

to section 13(1) of this Decree.

18. (1) No manager or any other officer of a bank shall-

(a) in any manner whatsoever, whether directly or indirectly have personal interest in any

advance, loan or credit facility; and if he has any such personal interest, he shall

declare the nature of his interest to the bank;

(b) grant any advance, loan or credit facility to any person, unless it is authorised in

accordance with the rules and regulations of the bank; and where adequate security is

required by such rules and regulation; such security shall, prior to the grant, be

obtained for the advance, loan or credit facility and shall be deposited with the bank;

(c) benefit as a result of any advance, loan or credit facility granted by the bank.

(2) Any manager or officer who contravenes or fails to comply with any of the provisions

of subsection (1) of this section is guilty of an offence under this section and liable on

conviction to a fine of N100,000 or to imprisonment for a term of 3 years; and in addition,

any gain or benefits, accruing to any person convicted under this section by reason of such

contravention, shall be forfeited to the Federal Government, and the gains or benefit shall

vest accordingly in that Government.

27
(3) Every director of a bank who has any personal interest, whether directly or indirectly,

in an advance, loan or credit facility, or proposed advance, loan or credit facility from that

bank, shall, as soon as practicable, declare the nature of his interest to the board of directors

of the bank, and the secretary of the bank shall cause such declaration to be circulated

forthwith to all directors.

(4) The provisions of subsection (3) of this section shall not apply in any case-

(a) where the interest of the director consists only of being a member holding less than

five per cent of the shares of a company which is seeking an advance, loan or credit

facility from the bank; or

(b) if the interest of the director may properly be regarded by the Bank as not being

material.

(5) For the purpose of subsection (3) of this section, a general notice given to the board of

directors of a bank by a director of such bank to the effect that he is-

(a) an officer or member holding five per cent or more of the shares of a company or firm

specified in the notice; and

(b) to be regarded as having personal interest in any advance, loan or credit facility which

may after the date of the notice, be made to that company or firm, shall be deemed to

be a sufficient declaration of interest in relation to any such advance, loan or credit

facility, if-

(i) the notice specifies the nature and extent of his interest in the company or firm;

(ii) the interest is not different in nature to or greater in extent than the nature and extent

specified in the notice at the time the advance, loan or credit facility is made; and

28
(iii) the notice is given at the meeting of the board of directors or the director takes

reasonable steps to ensure that it is brought up and read at the next meeting of the board of

directors after it is given.

(6) Every director of a bank who holds any office or possesses any property whereby,

whether directly or indirectly, duties or interests might be declare at a meeting of the board of

directors of the bank, the fact and the nature, character and extent of the interest;

(7) The declaration referred to in subsection (6) of this section shall be made at the first

meeting of the board of directors held-

(a) after he became a director of the bank; or

(b) if already a director, after he came into possession of the property.

(8) The secretary of the bank shall cause to be brought up and read, any declaration made

under subsection (3) or (6) of this section at the next meeting under this section in the

minutes of the meeting at which it was made or at the meeting in which it was brought up and

read.

(9) Any director who contravenes subsection (3) or (6) of this section is guilty of an

offence under this section and liable on conviction to a fine of N100,000 or to imprisonment

for 3 years or to both such fine and imprisonment.

19. (1) No bank shall-

(a) employ or continue the employment of any person who is or at any time has been

adjudged bankrupt or has suspended payment to or has compounded with his creditors

29
 or who is or has been convicted by a court for an offence involving fraud or

dishonesty, or professional misconduct;

(b) be managed by a management agent except as may be approved by the Bank.

(2) Except with the approval of the Bank, no bank shall have a director any who is a

director of -

(a) any other bank;

(b) companies which among themselves are entitled to exercise voting right in excess of

ten per cent of the total voting right of all the shareholders of the bank.

(3) No bank shall be managed by a person who is-

(a) a director of any other company not being a subsidiary of the bank; or

(b) engaged in any other business or vocation.

(4) Every director of a bank shall sign a code of conduct in such form or manner as the

Bank may, from time to time, prescribe.

(5) The chief executive of a bank shall cause all the officers of the bank to sign a code of

conduct as may be approved by the board of directors.

20. (1) A bank shall not, without the prior approval in writing of the Bank, grant-

(a) to any person any advance, loan or credit facility or give any financial guarantee or

incur any other liability on behalf of any person so that the total value of the advance,

loan credit facility, financial guarantee or any other liability in respect of the person is

at any time more than twenty per cent of the shareholders fund unimpaired by losses

30
 or in the case of a merchant bank not more than fifty per cent of its shareholders fund

unimpaired by losses; and for the purpose of this paragraph all advances, loans or

credit facilities extended to any person shall be aggregated and shall include all

advances, loans or credit facilities extended to any subsidiaries or associates of a body

corporate:

Provided that the provisions of this paragraph shall not apply to transactions between

banks or between branches of a bank or to the purchase of clean or documentary bills of

exchange, telegraphic transfers or documents of title to goods the holder of which is

entitled to payment of exports from Nigeria to advance made against such bills, transfers

or documents;

(b) any advances, loans or credit facilities against the security of its own shares or any

unsecured advances, loans or credit facilities unless authorised in accordance with the

bank's rules and regulations and where any such rules and regulations require adequate

security, such security shall be provided or, as the case may required, deposited with

the bank.

(2) A bank shall not, without the prior approval in writing of the Bank-

(a) permit to be outstanding, unsecured advances, loans or unsecured credit facilities, of an

aggregate amount in excess of N50,000-

(i) to its directors or any of them whether such advances, loans or credit facilities are

obtained by its directors jointly or severally;

(ii) to any firm, partnership or private company in which it or any one or more of its

directors is interested as director, partner, manager or agent or any individual firm,

partnership or private company of which any of its directors is a guarantor;

31
 (iii) to any public company or private company in which or anyone or

more of its directors jointly or severally maintains shareholding of not

less than five per cent either directly or indirectly;

(b) permit to be outstanding to its officers and employees unsecured advances, loans or

unsecured credit facilities, which in the aggregate for any one officer or employee, is an

amount which exceeds one year's emolument to such officer or employee;

(c) engage, whether on its own account or on a commission basis, in wholesale or retail

trade, including the import or export trade, except in so far as may exceptionally be

necessary in the course of the banking operations and services of that bank or in the

course of the satisfaction of debts due to it; so however that nothing in this paragraph

shall be construed as precluding a bank from undertaking equipment leasing business or

debt factoring provided that the foregoing provisions of this paragraph shall not apply to

a bank in the circumstances permitted under section 21 of this Decree;

(d) without prejudice to the provisions of section 21 of this Decree, acquire or hold any part

of the share capital of any financial or commercial or other undertaking except-

(i) any shareholding approved by the Bank in any company set up for the purpose of

promoting the development of the money market or capital market in Nigeria or of

improving the financial machinery for financing economic development;

(ii) any shareholding approved by the Bank pursuant to sub-paragraph (i) of this paragraph,

the aggregate value of which does not at any time exceed twenty-five per cent of the

sum of paid-up share capital and statutory reserves of that bank;

32
(iii) all shareholding acquired by a merchant bank while managing an equity issue:

Provided that the aggregate value of such acquisition does not at any time exceed the

sum of the paid-up share capital of that merchant bank or ten per cent of its total assets,

excluding contract items, whichever is higher and that this paragraph shall not apply to

any nominee company of a bank which deals in stock and shares for or on behalf of the

bank's customers or clients or majority interest acquired by a merchant bank in a

company while managing an equity issue;

(e) remit, either in whole or in part, the debts owed to it by any of its directors or past

directors;

(f) purchase, acquire or lease real estate except as may be necessary for the purpose of

conducting its business including provisions for foreseeable future expansion or

housing of its staff or other exceptional circumstances, where the agreement of the

Bank is obtained;

(g) sell, dispose or lease out any real estate.

(3) Notwithstanding the foregoing provisions of this section, a bank may secure debt on

any real or other property, and in default of repayment, may acquire such property and

exercise any power of sale, as may be provided for in any instrument or, by law

prescribed, immediately upon such default or soon thereafter as may be deemed proper.

(4) In paragraphs (a) and (b) of subsection (2) of this section, the expressions "unsecured

advances and loans" or "unsecured credit facilities", mean advances, loans or credit facilities

made with security, any part thereof which at any time exceeds the market value of the assets

constituting the security, or where the bank is satisfied that there is no established market

value, the value of the assets as determined on the basis of a valuation approved by the bank.

33
(5) In paragraphs (a) and (e) of subsection (2) of this section, the expression "director"

includes director's wife, husband, father, mother, brother, sister, son, daughter and their

spouses.

(6) All the directors of a bank shall be liable jointly and severally to indemnify the bank

against any loss arising from any unsecured advances, loans or credit facilities under

paragraph (a) of subsection (2) of this section.

(7) Any bank which, after the commencement of this Decree , enters into any transaction

inconsistent with any of the provisions of subsection (1) and (2) of this section is guilty of an

offence and liable on conviction to a fine of N1,000 for each day during which any such

transaction continues.

21. (1) A bank may acquire or 'hold part of the share capital of any agricultural,

industrial or venture capital company subject to the following conditions, that is-

(a) the venture capital company is set up for the purpose of promoting the development of

indigenous technology or new venture in Nigeria;

(b) the shareholding by the bank is in small or medium-scale industries and agricultural

enterprises as defined by the Bank;

2.5 DATA ABOUT STERLING BANK PLC

The Lagos office the bank is located at 20 Marina ,Lagos. While Warri branch is at opposite

Urhobo College, Effurun/Sapele Rd. Effurun by Odibo Housing Estate.

Warri branch personnel

Ufuoma Amrasa branch manager

Idowu Mohammed assistant manager

Aghe Fidelix head of marketing

34
Uche Ginika Michael CSO

Tunde Bamiboje F.T.O.

CHAPTER THREE

RESEARCH METHODOLOGY AND DESIGN

3.1 INTRODUCTION

It is customary to design and spelt out the method by which an intended

research work is to be conducted by the researcher.

The research design was aimed at enhancing the effectiveness of the

study thus paving way for a meaningful and systematic approach to the

study. It is on this ground that this chapter had being devoted to the

explanation of the research procedures, method of data collection, sources

of data collected, and the instruments employed. The chapter also

presents the methods used in analysing the data collected.

3.2 RESEARCH METHODOLOGY

There are different approaches or methods often adopted in conducting a

research. Some of these methods include experimental method,

econometric method, comparative, etc. It is worthy to note here that the

methodology to be adopted in the collection of presentation and in

analysing a research data depends on the objectives of the study.

35
 In this chapter, the methodology employed in this study, were

meticulously explained in the various sub sections that made up this

chapter. The main objective of this study has been to examine internet

fraud and it effect on the economy.

3.3 RESEARCH DESIGN

The study is empirical in nature and falls within the realms of macro

economic problems This situation made the use of historical data

inevitable. The techniques adopted in the research involved a

combination of statistical, mathematical and econometric techniques.

The use of historical data for the study, was informed by the need to

make use of authenticated and authoritative data computed from

published materials to give the study a more objective approach.

3.4 SOURCES OF DATA

The source of the data collected and used in the course of this study were

mainly secondary sources.

3.5 SECONDARY DATA

The secondary data were gathered from a variety of sources such as text

books, journals, magazines, papers delivered at symposia and seminars

by eminent scholars, statistical and economic bulletins, as well as

36
 other related sources.

In searching for the relevant and necessary data needed for the research

the researcher also embarked on using internet resources.

3.6 POPULATION DESCRIPTION

The population, in this study is the totality of the senior and junior staff of Sterling

Bank PLC. Warri. The sample size is 200 and this number of respondents were

chosen from the population. The rationale for studying a sample rather than the

population includes that:

1. Most empirical research work in the social science involves studying a

sample in place of the population.

2. Statistical Laws reveal that statistics composed from the sample data are

usually reasonably accurate.

3. Luckily, it is usually possible to estimate the level of confidence that can be

placed on the results. We should note that above is only possible if the probability

sample size is large enough.

3.7 SAMPLE SIZE

Spiegel (1992) observes that sampling theory is a study of the relationship existing

between a population or universe and the samples drawn from it. The population in

this study is from the senior/ junior staff of the firm. In order to make conclusions of

sample theory and statistical references to be valid, a sample must be selected as to

be representative of the population (Spiegel,1992). One way in which a representative

sample may be got, is by the process of stratified random sampling. In this research

37
 work, the technique of simple random sampling is used to select the sample of 100

respondents from each group of the personnel, making a total sample size of 200.

The list of all senior and junior staff of the firm is from the personnel department of

the company. The numbers were written on a piece of paper, put in a basket and the

papers were folded to cover the numbers and one of the pieces of paper was selected

at a time without replacing it and any name corresponding to the number becomes a

number of the sample. This method of sampling without replacement was done until

the sample of 100 respondents per group of personnel was arrived at.

3.8 INSTRUMENTS FOR DATA COLLECTION

Due to the macro nature of the problem under investigation. the use of the

basic or traditional research instruments of questionnaire, interviews,

observations, etc were precluded. However, the research relied on

published (secondary)materials from where the data considered necessary

for the purpose of this study, were completed and extracted.

3.9 FIELD WORK

The researcher and three other field data collectors did the fieldwork. The field data

collectors were other classmates also offering the Part-time ND program, who have

also offered research methodology. They had no problem gaining entrance into the

office under consideration since one of them has a friend working in the same Zenith

Bank. They were to be trained by the researcher on how to greet the respondents and

how to tick the questionnaire correctly and honestly.

38
3.6 DESCRIPTION OF DATA PRESENTATION AND ANALYSIS TOOLS

The data presentation tools are simple bar charts, histograms, and pictorial tables. The

most important parts of a table include;

(a) Table numbers

(b) Title of the table

(c) Caption

(d) Stub or the designation of the rows and columns

(e) The body of the table.

(f) The head note or prefatory note or explanatory just before the title.

(g) Source note, which refers to the literally or scientific source of the table (Mills

and Walter 1995)

39
 CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 INTRODUCTION

In the previous chapter, the research methodology and design have been

handled. In this chapter the data presentation and analysis are to be done. The

data is to be presented by means of tables; two simple bar charts, one

histogram and one pie chart to make it amenable for further analysis. By

analysis is meant the act of noting relationship and aggregating the set of

variables with similar attributes and also breaking the unit of their components

(Mills and Walters 1995).

In this research work, the research accepts the contention of Podsakoff and

Dalton (1995) that the factual information from the data can be used as a basis

for reasoning, calculation and discussion. Apart from the heading above, the

other headings in this chapter include:

Data Presentation,

Percentage analysis

Cross-tabulated analysis

Hypothesis testing

40
4.2 DATA PRESENTATION

TABLE 4.1
THE SUMMARY OF THE PERSONAL DATA
OF THE RESPONDENTS

1 SEX FREQUENCY
Male 150
Female 50
Total 200
Angles
2 Marital Status subtended
Married 130 in degree
Single 70
Total 200

3 AGE
21-30 years 90
31-40 years 90
41-50 years 10
51-60 years 10
Total 200

4 HIGHER
EDUCATIONAL
QUALIFICATION
DIPLOMA 10 18
OND 30 54
HND 80 144
FIRST DEGREE 20 36
SECOND DEGREE 40 72
NIM 20 36
TOTAL 200 360

The marital statuses of the 200 respondents: It is found that 130 of them

are married while 70 are single. For the ages of the 200 respondents, there

are 21-30 years, 31-40 years, 40-50 years, 51-60 years with frequency of

90,10 respectively. For the educational qualification of the 200 respondents

there are diploma, OND, HND, First Degree, Second Degree, NIM. and

they have frequencies of 10, 30, 80, 20, 40 and 20 respectively.

41
Figure 4.1 below shows the simple bar chart of the data on the sex of the respondents.

FIGURE 4.1: THE SIMPLE BAR CHART OF THE DATA ON THE SEX
OF THE RESPONDENTS

GENDER OF THE RESPONDENTS

160-

140-

120-
Frequency

100-

80

60 --

40 -

20
-
0 -
MALEGender FEMALE

TABLE 2. GENDER OF THE RESPONDENTS

Frequency percentage Valid Cumulative
Percent Percent
MALE 150 75.0 75.0 75.0
FEMALE 50 25.0 25.0 100.0
Total 200 100.0 100.0

Source: from data in table 1 (generated from SPSS) statistical package for social
science.

42
From figure 4.1 above, it is shown that male respondents have the modal

frequency of 150 out of the 200 respondents while the female respondents

have a frequency of 50.

Figure 4.2 below shows the simple bar chart of the data on the marital

statuses of the respondents.

FIGURE 4.2: THE SIMPLE BAR CHART OF THE DATA ON THE MARITAL
STATUSES OF THE RESPONDENTS

140 -

120 -

100 -
Frequency

80 -
60 -
40 -
20 -
0 -
MARRIED SINGLE
Marital status

TABLE 4.3. MARITAL STATUS OF THE RESPONDENTS

Status frequency Percentage Valid Cumulative

Percent Percent
MARRIED 130 65.0 65.0 65.0
SINGLE 70 35.0 35.0 100.0
Total 200 100.0 100.0

43
 From figure 4.2 above, it is shown that the married respondents have the

modal frequency of 130 out of the 200 respondents while the single

respondents have the frequency of 70 of them.

FIGURE 4.3: THE HISTOGRAM OF THE DATA ON THE AGES OF THE

RESPONDENTS.

AGES OF THE RESPONDENTS

100
80
60
40
20
Frequency

TABLE 4. AGES
Categories Frequency OF THE RESPONDENTS
Percentage Valid Cumulative
Percent
(years) Percentage
21 TO 30 90 45.0 45.0 45.0

31 TO 40 90 45.0 45.0 90.0

1.0 2.0 3.0 4.0

41 TO 50 10 Age group
5.0 5.0 95.0
44
51 TO 60 10 5.0 5.0 100.0

Total 200 100.0 100.0

SOURCE: From the data in Table 1.

From figure 4.3 above, it is shown that the age classes limit are 20.5-30.5

years, 30.5-40.5 years, 40.5-50.5 years and 50.5-60.5 years with

frequencies of 90, 90, 10, and 10 out of 200 respectively. This shows that

this is bi-modal distribution as the age classes of 20.5-30.5 years and 30.

5-40.5 years have a frequency of 10.

Figure 4.4 below shows the pie chart of the data on the highest

educational qualifications of the 200 respondents.

FIG.4.4 THE PIE CHART OF THE DATA ON THE HIGHEST

EDUCATIONAL QUALIFICATIONS OF THE 200
RESPONDENTS

OND DIPLOMA
FIRST DEGREE
180
540 OND
SECOND DEGREE 360

720
HND
1440
FIRST DEGREE 360

45
 TABLE 4. 5 EDUCATIONAL QUALIFICATION OF THE RESPONDENTS
Educational level Frequency Percentage Valid Percentage Cumulative
Percentage
DIPLOMA 10 5.0 5.0 5.0

OND 30 15.0 15.0 20.0

HND 80 40.0 40.0 60.0

FIRST DEGREE 20 10.0 10.0 70.0

SECOND 40 20.0 20.0 90.0

DEGREE
NIM 20 10.0 10.0 100.0

Total 200 100.0 100.0

SOURCE: from the data in table 1.

46
 From figure 4.4 above, the Educational Qualifications are Diploma, O.N.D, First

Degree, Second Degree and NIM and the subtended angles in degrees are equal to

180, 540, 1440, 360, 720 and 360 and respectively at the center of the circle.

4.3 CROSS-TABULATED ANALYSIS

Table bellow show the analysis of the statuses of the 200 respondents

TABLE 6. CROSS- TABULATION 1

If it is possible to combat financial distress

in the country . NO
YES NO DON’T ANSWER Total
KNOW 2 12
19
91
DIPLOMA 6 2 2
OND 19 7
HND 26
FIRST
60 31 31
DEGREE - 10 9 21
SECOND 31 9 200
DEGREE 21
NIM
The above table shows that
Total the 100
total of 100 43 11 (out of 200 said YES.
respondents
39 939
This proved that it is possible to combat financial distress in the country .

TABLE 7. Cross-tabulation 2

Is it possible for individual to avoid Internet investment scams?

YES DON’T NO
NO KNOW Total
DIPLOMA 10
ANSWER 10

OND 19 19
HND 14 30 47 91
FIRST
DEGREE 10 9 19
SECOND
DEGREE 40 40
Is it possible to combat
NIM internet fraud?
21 . 21
Total 104 40 47 9 200

(2) Is it possible for individual to avoid Internet investment scams?

47
 The above table indicates that it is possible for individual to avoid

investment scams. 104 respondents out of 200 said yes. While 40 did not

agree with the fact.

4.4 HYPOTHESIS TESTING

In attempting to arrive at decisions about the population, on the basis of

sample information, it is necessary to make assumptions or guesses about

the population parameter involved. Such an assumption is called

statistical hypothesis, which may or may not be true. The procedure,

which enables the researcher to design on the basis, of samples regarding

whether a hypothesis is true or not is called test of hypothesis or test of

significance.

The null hypothesis asserts that there is no significant difference between

the statistics and the population parameters and what ever is observed as

difference there, is merely due to fluctuations in sampling from the same

population. Null hypothesis is denoted by the symbol H0. Any

hypothesis, which contradicts the H0, is called an alternate hypothesis

and is denoted by the symbol H1. The researcher used chi-square

analysis.

CHI-SQUARE TEST

48
 The C is one of the simplest and most widely used non-parametric test in

statistical work. It makes no assumptions about the population being

sampled. The quantity c describes the magnitude of discrepancy between

theory and observation i.e, with the help of c test we can know whether a

given discrepancy between theory and observation can be attributed to

chance or whether it results from the inadequacy of the theory to fit the

observed facts. If c is zero, it means that the observed and expected

frequencies completely coincide. The greater the value of c the greater the

higher the discrepancy between observed and expected frequencies.

The formula for computing chi-square is –

c =  ( O- E)2/E

Where,O=Observed frequency

E=Expected or theoretical frequency

4.5 SOFTWARE USED FOR DATA ANALYSIS:

For the data analysis and the interpretation, the researcher has adopted

advanced version of SPSS (statistical package for social science). This

application software has facilitated the researcher to construct the

frequency table, various types of charts and to find out the valid

percentage responses from the sample. This automated data analysis has

minimized the researcher’s time constraints and reduced human error to

give accurate outlay of information.

49
Chi-Square Test (1)

If it is possible to combat financial distress in the country .

Observed Expected Residual Decision

F F
YES 100 50.0 50.0 Accept
NO 43 50.0 -7.0 Reject
DON’T
KNOW 39 50.0 -11.0 Reject
NO 50.0
ANSWER 18 -32.0 Reject
Total 200

Chi-Square Test (2)

If "banking business" means the business of receiving

deposits on current and savings accounts.

Observed Expected Residual Decision

F F
YES 104 50.0 54.0 Accepted
NO 40 50.0 -10.0 Rejected
DON’T
KNOW 47 50.0 -3.0 Rejected
NO
ANSWER 9 50.0 -41.0 Rejected
Total 200

Residuals

50
The observed value of the dependent variable minus the value predicated

by the regression equation, for each case. Large absolute values for the

residuals indicate that the observed values are very different from the

predicted values.

SOURCE: From the questionnaires administered.

The formulated hypothesis that is subject to statistical test is at 5% level

of significance in testing hypothesis, the calculated value of the test

statistics is usually compared with tables of value. The critical values of

the test statistics serve as criterion value, it affords the basis for rejecting

the null hypothesis as a function of the value of the tested statistic.

Reject the null hypothesis if the calculated value of the test statistic is

greater than the critical value.………………………………………….

Accept the null hypothesis if the calculated value of the test statistic is

less than the critical value.

TEST STATISTICS

If "banking business"
If it is possible to combat
means the business of

financial distress in the receiving de posits on

current and savings

country .
accounts.

Chi-Square 73.880 94.120

df 3 3

51
 note: df = degree of freedom

4.6 SUMMARY OF RESULT

Level of significance……….0.05

Critical value………………………43.0

Calculated value……………………73.880

From the above analysis, it could be seen that in the first test, it is

possible to combat financial distress in the country, the calculated value

is greater than the critical value so we reject the hypothesis.

In the second test which state that "banking business" means the business of

receiving de posits on current and savings accounts, the level of significance is

0.05, the critical value is 44 while the calculated value from the test statistics

table is 94.120. Analysis the data above, it is very clear that the calculated

value is greater than the critical value so we reject the hypothesis.

52
 CHAPTER FIVE

FINDINGS AND CONCLUSION

5.1 FINDINGS

Through this research, the researcher has been able to discover and

established the fact that: financial institution is an institution that provides

financial services for its clients or members. Probably the most important

financial service provided by financial institutions is acting as financial

intermediaries.

53
5.2 CONCLUSION
Financial institutions provide service as intermediaries of the capital and debt

markets. They are responsible for transferring funds from investors to companies, in

need of those funds. The presence of financial institutions facilitate the flow of money

through the economy. To do so, savings are pooled to mitigate the risk brought to

provide funds for loans. Such is the primary means for depository institutions to

develop revenue. Should the yield curve become inverse, firms in this arena will offer

additional fee-generating services including securities underwriting, and prime

brokerage.

54