1.1 BACKGROUND OF THE STUDY
Chamber’s Twentieth Century Dictionary defines a bank as an “institution for the keeping, lending exchanging etc of money. Sayers defined bank thus: “ordinary banking business consist changing cash for bank deposit and deposit for cash, transferring deposit from one person or corporation to another, giving deposit in exchange for bill of exchange etc. thus a bank is an institution which accepts deposit from the public and in turn advances loans by creating credit.
Banking business started in Nigeria in 1892 when the African Banking Corporation was established. Between the period, 1892 and now, a lot of banks were established, of which most of them had been liquidated while others are still existing. Available statistics had showed that these banks that were liquidated were mostly indigenous banks, implying that indigenous banks liquidated faster and often than expatriate ones. However, the historical background of these banks both existed and existing ones in Nigeria are quite confusing and there is a need to ascertain the number of banks that has been liquidated and the reasons for their liquidation.
It is the issues in the above discussion that arouse the interest for an empirical review of historical background of Nigeria banks to the determine the reason for constant bank failure, the prospects of surviving banks and to place on record the background of Nigeria banks in clear terms.
1.2 STATEMENT OF THE PROBLEM
Banking started in Nigeria in 1892 with the first being the African Banking Corporation, since then a lot of banks has been established in Nigeria with some of them still existing while a lot has gone into extinction and in most cases their background is in doubt.
Therefore a need to carry out study to empirically review the historical background of banks in Nigeria to ascertain the reasons for the frequent bank distress in Nigeria, especially, the indigenous banks from the inception of banking in Nigeria and or ascertain the ages and prospects of the surviving banks in the Nigeria banking system became necessary.
Given the above statement, a research problem therefore arises that: the background of some banks that existed and still existing in Nigeria is quite confusing and there is need to place on record their background on clear terms and to explore the reasons for frequent indigenous bank failure.
1.3 OBJECTIVE OF THE STUDY
The objectives of this study among others include:
1) To document properly and adequately the historical background of operating banks in Nigeria and their niches in banking.
2) To determine how well the banks were doing in terms of branches, employees, shareholders fund and total loans and advances.
3) To determine the amount or percentage of loans and advances that were financed by shareholder fund.
4) To determine the reasons of frequent indigenous banks failure in Nigeria.
5) To make necessary recommendations based on our findings.
1.4 SIGNIFICANCE OF THE STUDY
The outcome of the research study will be of immense value to:
• The government and the people of Nigeria who may want to have deep understanding of establishment of banks in Nigeria and their areas of banking business in the country.
• Practitioners in the banking industry who may want to explore the knowledge gotten from this study for effective banking decision-making and policy formulation.
• This study will expose all and sundry to the challenges faced by early banks in Nigeria which affected rapid banking development and was detrimental to economic growth in the financial system.
• Students of Banking, Finance, Economics, Business Administration and others in related field of study who may become financial service entrepreneurs in the near future.
• Historical analysis of Nigerian banks serves as reference materials to researchers, government, businessmen and academia in the areas of foreign discrimination in bank operation, lack of support for indigenous banks, existence of politics/racism in early banking and why Nigerian banks are where
they are today, etc.