BANK FAILURE IN NIGERIA AND MODERN SYSTEMS OF COMPUTER BANKING TO BRING IMPROVEMENTS
CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
Bank has been defined in various ways by different people. It is basically a service industry operated by people for the general interest of the public providing a mechanism for the mobilization of finds from surplus units in the economy and channeling them to the deficit units through extension of credits. The link between this surplus and deficit is actually vital because it facilitate business transaction and economic development. As an economic unit. The business enterprises acquires organizes and transforms factors of production in the activity of producing goods and services, the way in which these goods and services or input factors are combined and transformed units an output flow may be considered as problem of maximizing an output from a given input.
As a result, the advent of banking institution and its scope limitation was to that business activities findings their expressions in monetary terms.The banking institution is defined in section 61 of the bank and financial institution decree sub-section 21 of 1991 as a business of receiving cheques, deposits on current accounts saving accounts or other account like paying or collecting cheques drawn by or paid in by customers, provision of finance or such other business or services for the government and the entire economy.
1.1 SCHEDULE OF BANKS IN NIGERIA
The banking system in Nigeria is controlled by one body known as the Central Bank of Nigeria (CBN) which serves as a clearing house fro economic purpose. It veins of control in the naming include Commercial Bank, merchant banks, special banks like mortgaged bank, development banks such as Nigeria banks for commerce and industry, Nigeria agricultural and cooperate banks, peoples bank and community banks.
The banking system is a regulated sector of government and we could understand that its nature of activities spelt out the position it occupy in the economy since the funds they lend to deficit units are owned by third parties, therefore prudence on accounting theories and principle4s demands that such funds should be managed properly to sustain the confidence of the depositors. As a result of this prudential requirement, the authorities would want to interven in the operation and control of the banking system to correct all the short coming of the price fixing mechanism in ensuring that what is commercially reserve for an individual bank also approximate social rationnaties as much as possible. Example interest rates charges by banks may be regulated to encourage savings mobilization, bankiung habits and ensure adequate investment for rapid economic growth. Considering the imperfect market in most economy both developed and developing financial institution often include government intervention to boost investment redirect credit to economic sectors with social but low commercial rates returns. These and a lot of other rationaties pre-informed government thinking towards regulation contract in it and also supervise the sector. Experience here, therefore shows that authorities short fall in financial intervention does affect the finance market function as shall illustrated in hypothesis I. Such intervention frequently result in new economic desertion leading to less optimal result to resource utilization. For example, the establishment of new banks in pre-SAP (structural adjustment programme) era was highly restricted, the existing once constituting a king of oligopoly did not really care either to extend their services to the rural communities or care for how to improve their activities and operation pattern.
Consequently economic deregulation has often been resorted to in order to remove or minimize those desertion. Deregulation implies the relaxing or minimization of control or regulation. Financial market are usually first sector of the economy to be subjected to deregulation in view of their strategic locations. The campaign for deregulation of financial institution has bee vigorously undertaken in many developed and developing economy. Example in United State of America regulation which had imposed interest rate ceilings on the deposit of the federal reserve banks was abolished in 1983. recently, a member of third world countries with heavy debt burden and dwindling foreign exchange earning has also adopted policies to deregulated their economy particularly the financial institution in the economy.
This has usually been carried out as part of comprehensive structured and statistical experience to stop large scale fraudulent practices. It also follows with the reasons for committing fraudulent art and ended with a computer abuses in the banking industry.
