AN INVESTIGATION INTO MANAGING FINANCIAL DISTRESS IN NIGERIA BANKING INDUSTRY THROUGH STRATEGIC PLANNING

TABLE OF CONTENTS

Title Page

Certification

Dedication

Acknowledgments

Abstract

Table of Contents

CHAPTER ONE

1.0     Introduction

1.1     Background to the Study

1.2     Statement of the Problem

  • Objectives of the Study

1.4     Research Questions

1.5     Research Hypothesis

1.6     Rationale for the Study

1.7     Scope of the Study

1.8     Definition of Terms

          End of Chapter References

 

CHAPTER TWO

2.0     Literature Review

2.1     A Brief History of Banking Services in Nigeria

2.1.1  Bank as Financial Intermediaries

2.2     Distress

2.2.1  Introduction

2.2.2  Definition of Distress

2.2.3  Nature of Bank Distress

2.2.4  Factors that Lead to Distress

2.2.5  Problem Brought about Distress

2.2.6  A Loss of Public Confidence

2.2.7  Charles Soludo Policy and Distress

2.8     Lamido Policy and Distress

2.3     Strategic Planning

2.4     Theoretical Framework

2.5     Historical Background of Wema Bank Plc

2.6     Strategic Planning Process in Wema Bank

End of chapter references

 

CHAPTER THREE

  • Research Methodology

3.1     Introduction

3.2     Population of the Study

3.3     Sample Techniques and Sample Size

3.4     Method of Data Collection

3.5     Data Collection Instrument

3.6     Method of Data Analysis

End of Chapter References

CHAPTER FOUR

4.0     Data Presentation and Analysis

4.1     Introduction

4.2     Presentation

4.3     Restatement of Hypotheses

4.4     Testing of Hypothesis

End of Chapter References

CHAPTER FIVE

5.0     Summary, Conclusion and Recommendations

5.1     Summary

5.2     Conclusion

5.3     Recommendations

End of Chapter References

Bibliography

Appendix

Questionnaire

 

CHAPTER ONE

1.0     INTRODUCTION

1.1     BACKGROUND TO THE STUDY

The banking industry in Nigeria from early 1960’s was a comfortable and profitable oligopoly with limited room for product or price competition but predictable stable pool of revenue and net intend margin sufficient to cover overload and provides a reasonable return. On capital banks offered a variety of retail services an range of individual and corporate customers and assumed vastly different categories of credit risk. They concentrate most of their investment in new branches and staff to the common service of all customers segment regardless of whether a segment could make a profit or loss.

The laws and regulations guiding the operation of bank prevent competitors among banks; this give thanks a big advantage over the non bank financial institution. The result was more than twenty years of profitable and sound banking.

The rate of which most of the soundness’ can be taken as artificial as the profits posted by banks were not reflection of their efficiency non of the effectiveness of their service to customers.

Based on such circumstance bank operates mostly on the simplest planning system. The planning was generally not more than a year, this situation there were no well conceived business strategy in the plan exclusive reliance on budgetary and financial control was found in simple planning system has provided to have major limitation.

Few bank in Nigeria had something better than the simple planning system during the twenty years under review such bank engage in long range planning to meet the projected expansion of capacity during the stable but fast growing business environment of the 1970’s as John Magnard Kayness put it, the long run is simply a series of short runs. In this case long range is a series of simple planning.

The primary advantage of the long range planning system is that it provides a multi year forecast of demand for the service of the strategies and policies to meet them. The banks that spelt the advantages of and perform often that depend basically on simple planning system.

The limitation of long range planning has becomes clear since the inception of the structural adjustment progroamme (SAP) in 1986.

In view of the accelerating structural changes in the national economy aid the growing uncertainty complexity and unpredictability in the legal environment planning has provided some key concept and processes which help to understand the market and the forces aiming changes a dynamic and creative frame work of resource allocations and a process for the generation and evaluation of strategic choices at various level of organisation. Hence the need for this study to determine the effectiveness of strategies planning in the management of distress in banking system.

1.2     STATEMENT OF THE PROBLEM

Planning in the bank is as old as its established in Nigeria but planning horizon has been traditional short term type which is the simple planning system.

The operating environment abounds in the environment that has grossly been responsible for the adequacy of simple planning system.

The complexity of the bank operating environment since the adoption of deregulation economy through structural adjustment programme in 1986 has made planning and long range planning inadequate. Hence the need for the adoption of strategic planning by proactive managers of deregulation of financial institution to serve as slating factors against average impact of deregulation measures such as distress in banking adverse impacts of banking especially now about fifty seven banking institution out of the licensed 120 banks are experiencing distress in their operation going by the January 19th 1998 central bank of Nigeria announcement of liquidation of 36 licensed banks, the total numbers of bank already liquidated has grown to thirty one.

The enormous negative effects of distress posed to various stakeholders in the financial institutions are undesirable as analyzed below.

  • Shareholders are exposed to the risk of denial of returns on their investment in form of dividend and eventual loss of capital contributing in the course of collapse on liquidation of such distressed institution as done fro 36 banks mention above.
  • Depositor are faced with the risk of losing part of the whole amount of deposit in a distressed banking institution.
  • Management and employee can be accused of managerial incompetence, irregular payment of data collected.
  • The general public can loose confidence in their entire banking system and at the same time effect their banking habit and the nation payment negatively. This study will actually show how the bank strategic planning to curb the threat of distress.
    • OBJECTIVES OF THE STUDY

The study aim at achieving the following objectives:

  1. To examine the process of strategic planning in the banking industry with particular reference to Wema bank plc.
  2. To determine the effectiveness of strategic planning in the management of distress in the banking industry with particular reference to Wema bank.

1.4     RESEARCH QUESTION

For the purpose of this study, the research question shall be:

  1. What are the processes of strategic planning in the banking industry?
  2. What is the effect of strategic planning in the of distress banks?

 

1.5     RESEARCH HYPOTHESIS

The null hypothesis for this study will be denoted by Ho       While the alternative will be denoted by Hi.

Ho: –  Strategic planning has no significance positive effect on the banking institution performance in Nigeria.

Hi: –   Strategic planning has significance positive effect on the banking institution performance in Nigeria.

1.6     RATIONALE FOR THE STUDY

The disturbance and uncertainty that characterized the banking operating environment today dictated the need for the adoption of strategic planning by every bank that wishes to continue the hostile and dapperly planning terrain and at the same time ensure continuity in business.

The study will be of great benefit to practitioners in non distressed banking institution since the result of the study will shed light on the efficacy and usefulness of strategic planning in the banking institution on industry.       The study will be a useful guide for general practicing managers and for the academic. It would contribute to the pool of knowledge on strategic management studies.

1.7     SCOPE OF THE STUDY

This study shall be focused on solving the problems bank distress based on the use of strategic planning.

Therefore, the scope of the study shall be limited to strategic planning, procedure means by which banes uses it for poring and how it has help Wema bank survive.

Then the researcher will also take time into the effect of distress of bank to the economy at large.

1.8     DEFINITION OF TERMS

Bank: This is a place where money and valuable goods are kept for safely purpose.

Distress: This is a state of dissolution of an organisation.

Executives: These are people who work as a corporate officer of an organisation.

Money: This is a mean of exchange of product or services.

 

 


END OF CHAPTER REFERENCES

 

A CBN/NDIC Collaborative Study (1993) Distress in Nigeria Financial Industry, Publisher Service Ltd. Pg 31-39 Lagos.

 

Anuo, A. (1980) Survival of Business in Nigeria, an Unpublished Research Study to the University of Ibadan.

 

Benston, G. (1995) Prospectors Staff and Short Banking, Bowman USA

 

Drunkar, F. (1977) Management Task, Responsibilities Practice, Panbooks, Pg 400-447 London.

 

 

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