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PROJECT TOPIC: IA EXAMINATION OF MONETARY POLICY AND FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANK IN NIGERIA

Project Body:


CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

Banks play an important role in financial system and the economy of a country. Banks among other financial institution are organizations which through its activities (Such as accepting or accepting and handling of deposit of its customer, making available loans to individuals and organizations based on request among others) contributes to a nation’s economic growth in particular and national development at large.

Ajayi (2014) refers to banks as “the linchpin of the economy of any country, they occupy central position in the country’s financial system and are essential agent in the development process. By intermediating between the surplus and deficit saving units within an economy, banks mobilize and facilitate efficient allocation of national saving thereby increasing the quantum of investment and national output”.

According to Chirwa and Mlachilla (2014) cited in Soyemi et al (2013) banks are financial intermediaries which play a key role in transforming deposits into financial assets; they channel funds from entities with surplus liquidity to those with deficit liquidity thereby facilitating capital formation and trade, bank also play a role in performing loans and creative accounting practices among many other very serious infractions by management of some of these banks.

According to Ekpung, Udude and Hope (2015) the existence of an effective banking sector is necessary for every economy because it creates the necessary environment of economic growth and development through its role in intermediating fund from surplus sector to deficit sector of the economic unit. Banking sectors are financial intermediaries, whose activities are for collection of saving and lending, thus standing in between the ultimate lender and borrower and matching the investment requirement of the lender.

The banking industry as regulated by central bank of Nigeria is made up of deposit money banks usually referred to as commercial bank and other financial institutions which include Micro-Finance bank, Finance Companies, Bureau De change, Discount house and Primary Mortgage Institution.

Soyemi, Akinpelu and Ogunleye (2013) state that the role of deposits money bank (DMBs) otherwise known as commercial banks is central to financial economic activity in an economy, especially in developing country like Nigeria.


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