FINANCIAL DISTRESS IN SOURCE COMMERCIAL BANK REASONS, CONSEQUENCIES AND SOLUTION

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND TO THE STUDY

In Nigerian Banking system considering the last decade the Commercial Banking to be praise had undergone a rapid expansion both in terms of the number of Institution and the scope of financial services rendered. As bank increasing was liberalized so was the scared of instability sown in these banking system at the sometime. As these expansion trend continuous, a sign of lacked vision among the investors and the directs motive of quick return to satisfy liquidity operation. The word distress had been in assistance but increased promptly as these institution increased due to acute shortage of resources and the massive withdrawal of deposits by government agencies and other public sectors from these banks. The development trend the financial structure, exposed and undermine the economic system which impact development of the economy. Therefore, distress places a great burden on regulation, authority, depress the economy undermine the payment system and discourage savings.

1.2  STATEMENT OF THE PROBLEM

Some Commercial banks have been divided to assist in loans and advance to various sectors of the economy. And the Commercial banking is know as retail banking which accept deposit and makes payment to his customers. But the financial condition of source of these Commercial Banking due to the political instablility/lactory campaign that wad on. Political analyst describes the allocation to be one of the brutal crises that was to come. Therefore, there was price withdrawal of fund by these bank customers. These Institutes is now bogged down by distress, insolvency, poor liquidity due to deadline in deposit and the confidence. The crisis has been averted and the urgency prompted the study. This research work is disquiet to describe the financial distress in some Commercial Banking System in Nigeria.

1.3   OBJECTIVE OF THE STUDY

The objective of the study are:

1. To describe the nature and types of financial distress.

2. To identify some of the Commercial Banks involved in the distress in Nigeria.

3.  To identify the causes of financial distress in these Commercial Banks.

4. To determine the level of distress in these Commercial Banks.

5. To find out if the distress is caused by poor management.

1.4   SIGNIFICANCE OF THE STUDY

The importance of a health banking system cannot be over emphasized for so many reasons, ranging from the vital economic importance of the longe deposit at state to public confidence jobs and carear of people and the key role these banks plays in economic development. Also the benefit of finding solution of how to get a solution ofthe crisis will be found useful to invest or customers of these banks, the regulatory and supervisory authority and even the Government. The solution will also be useful to the managers in general of these banks.