How Recurrent Bank Failures Contributed to the Under Development of the Nigerian Economy

Abstract

The study attempted to investigate how the nagging and recurrent bank failures in Nigeria have contributed to the under-development of the Nigerian economy. It also critically assessed the extent to which these identified factors are accountable for the failure and to ascertain other factors that may be responsible. The study involves 81 respondents from selected banks (First bank, Enterprise bank, Skye bank, Stanbic IBTC, and Zenith bank) in the Nigerian Banking industry. Data for the study was drawn mainly from primary sources. The questionnaire was used in collecting data for the study. The data generated was analyzed using simple descriptive statistics (frequency analysis). The study reviewed and confirmed the presence of Systemic failure in the Nigerian banking industry and its effect on economic growth. All the major factors attributable to be causing failure namely institutional, economic and political were discussed, some of which are; poor management, inadequate monitoring of bank operations by regulatory authorities, ineffective mechanism for fraud prevention, poor risk management, poor credit analysis and administration. To arrest these worrisome trend and also avoid their further encroachment on the entire banking system, the regulatory authorities are advised to be proactive in management and ensuring safe and sound Banking practices which will be achieved by introducing more innovative, pre-emptive and urgent measures of evaluating the features of failure at an early stage so as to drastically reduce the menace of Bank failures and its attendant consequences on the Nigerian Economy as a whole.