THE IMPACT OF BANK FAILURE ON NIGERIA’S ECONOMY

(A CASE STUDY OF SAVANNAH BANK PLC)

BY
JOSEPH RASHIDI USMAN
PSP/SABS/BFN/HND/2019/0086

BEING A RESEARCH PROJECT SUBMITTED TO THE DEPARTMENT

OF BANKING AND FINANCE SCHOOL OF ADMINISTRATION AND
BUSINESS STUDIES, PLATEAU STATE POLYTECHNIC, BARKIN
LADI; IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE
AWARD OF HIGHER NATIONAL DIPLOMA (HND) IN BANKING AND
FINANCE

DECEMBER, 2022

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 APPROVAL PAGE

This project has been approved by the undersigned.

________________________ ___________________
Project Supervisor Date

________________________ ___________________
Head of Department Date

________________________ ___________________
External Examiner Date

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 DEDICATION

This project is dedicated to God Almighty.

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 ACKNOWLEDGEMENTS

Most importantly, I am most grateful to the Most High God for making it possible

for me to reach the final end of the project. Glory be to him.

My unconditional appreciation goes to my supervisor, Mr. Prince Luka Mangut,

Sir you are a father and a mentor to me. May God’s blessing be upon you. Also I

want to appreciate the HOD of the department Mr. Solomon Mcdul and all the

lecturers of the department of Banking and finance for the their immense

contribution to the success of studies.

My parents who have supported me spiritually, physically and financially. Thank

you very much. My profound gratitude goes to my family and relatives for their

contributions in one way or the other.

Lastly I want to appreciate all my class mates especially those who contributed to

the success of my studies through their words of encouragement. I can’t mentions

names but I appreciate you all.

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 TABLE OF CONTENTS
Title -- - - - - - - - - - i
Declaration - - - - - - - - - ii
Approval- - - - - - - - - - iii
Dedication - - - - - - - - - - iv
Acknowledgment - - - - - - - - v
Table of contents - - - - - - - - - vi
Abstract - - - - - - - - - - viii

CHAPTER ONE: RESEARCH DESIGN

1.1 Background of the Study - - - - - - 1
1.2 Statement of the Problem - - - - - 3
1.3 Research questions- - - - - - - 5
1.4 Objectives of the study - - - - - - 5
1.5 Significance of the study - - - - - - 6
1.6 Statement of hypotheses - - - - - - 7
1.7 Scope and Limitation of the study - - - - - 7
1.8 Historical background of the case study - - - - 8
1.9 Definition of terms - - - - - - - 10
References- - - - - - - - - 11
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction - - - - - - - - 12
2.1 Conceptual Framework- - - - - - - 13
2.1.1 Concept of bank failure - - - - - - - 13
2.1.2 Impact of bank failure on the Nigerian economy - - - 14
2.1.3 Bank Distress - - - - - - - - 16
2.1.4 Nigerian Policy Review -- - - - - - 17
2.1.5 Reduction of bank failure in Nigeria through the introduction of strategic
internal reform - - - - - - - - 18
2.1.6 Prevention of bank failure in Nigeria - - - - - 19
2.3 Theoretical Framework - - - - - - 21
2.3.1 Liquid Asset Theory - - - - - - 21
2.3.2 Commercial bill theory - - - - - - 22
2.3.3 Innovations Theory - - - - - - 22
2.3.4 Frictional Theory of Profits - - - - - 23
2.3.5 Liquidity-Profitability trade-off Theory - - - - 24
2.4 Empirical Review- - - - - - - - 25
References - - - - - - - - 33

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CHAPTER THREE: RESEARCH METHODOLOGY
3.0 Introduction - - - - - - - - 35
3.1 Population of the Study - - - - - - - 35
3.2 Sampling techniques - - - - - - - 35
3.3 Sample Size-- - - - - - - - 37
3.4 Method of data Collection - - - - - - 38
3.5 Method of data presentation and analysis - - - - 39

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Introduction - - - - - - - 40
4.2 Data presentation and Analysis - - - - - 40
4.3 Test of Hypotheses- - - - - - - 45
4.4 Discussion of Findings - - - - - - - 48

CHAPTER FIVE: CONCLUSION

5.1 Introduction - - - - - - - - 49
5.2 Summary of the findings- - - - - - 49
5.3 Conclusion -- - - - - - - - 50
5.4 Recommendations- - - - - - - 51
5.5 Suggestion/needs for further Research - - - - 52

Bibliography
Appendix

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 ABSTRACT

The aim of this research was to investigate the impact of bank failure on the economy
of Nigeria. The factor which prompted the researcher to carry out the research is broken
into their component parts and discussed, the purpose and scope of the research work
were defined and preliminary discussed inform of research questions. The researcher
went further to review past literature on the causes and the impact of bank failure on
the economy of Nigeria. Here, the concept causes theoretical framework of financial
distress in banks were treated, also treated were the strategies and measures adopted to
effectively managed bank failure in Nigeria. The research work also discussed the
research methodology adopted for the study, types of data used and the method of which
such data were collected and analysed. The data collected were presented using tabular
form and analysis was by simple percentage method. The researcher also went further to
find out that the regulatory authorities should adequately, regularly and effectively
monitor the records of banks to ensure that they comply with the provision of relevant
legislation of the banking sector and to identify easily enough signals to distress. The
researcher also makes some recommendations on what should be done by the regulatory
authorities in order to fight distress in the Nigeria banks.

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