Impact of Assets Management Corporation of Nigeria on the Survival of Distressed Banks
CHAPTER ONE
Objective of the study
- To know the extent which AMCON’s intervention affected the survival of distressed banks in Nigeria
- To know the challenges encountered by AMCON in the process of reviving the distressed bank
- To know the strategies that can be adopted to enhance the effectiveness of AMCON’s intervention in the survival of distressed banks in Nigeria
CHAPTER TWO
REVIEWED OF RELATED LITERATURE
Introduction
Odufuye investigated the impact of bank credit on Nigerian economic growth for the period of 24 years (i.e. 1992-2015) due to the poor accessibility of funds by the investors to invest on real sectors of the economy. Secondary sources of data were used and gathered from journals,textbooks and the Central Bank of Nigeria’s (CBN) statistical bulletin. The variables employed are gross domestic product as proxy for economic growth, commercial bank credits to small and medium scale enterprises, credits to private sector, money supply and interest rate. To avoid spurious results, Ordinary Least Square (OLS) estimation technique with the aid of Statistical Package for Social Science (SPSS) was used as a statistical tool. The findings revealed that each of the explanatory variables has insignificant impact on gross domestic product. Based on the f-statistic result, it was also discovered that the joint variables of bank credit have significant impact on gross domestic product for the period under review. The study concluded that bank credit if properly channelled is a catalyst for Nigerian economic growth. Dare & Okeya empirically examined the impact of monetary policy on the performance of commercial banks in Nigeria. The study specifically adopts United Bank for Africa (UBA) Plc as a case study. The study made use of a panel cross sectional data covering the period from 2009 to 2014. Multiple linear regression technique was employed to test the relationships inherent in the explanatory and dependent variables with the aid of Statistical Package for Social Sciences (SPSS), Version 20. The estimated model expresses banks’ operating performance as a function of monetary policy represented by Monetary Policy Rate (MPR), Cash Reserve Requirement (CRR) and Liquidity Ratio (LR) while Return on Assets (ROA) is used as a proxy for banks’ credit performance. The study found out that there is a positive but statistically insignificant relationship between MPR and ROA in the chosen bank. The analysis further indicated negative and statistically insignificant relationships between CRR, LR and ROA. The study concluded that the rationale for the statistically insignificant relationships observed might not be far from the commercial banks’ low rate of compliance with monetary policy guidelines. The findings are inconclusive and the study is based on the case of United Bank of Nigeria Plc. and not on the entire generality of the country. Adegbite et al. examined the investment policies in the banks with the intention to suggesting better policy for better management of assets and liabilities for unsound settlement. Questionnaire instrument was administered to twenty four deposit money banks and five industry regulators. Using Multivariate Analysis of Variance (MANOVA) as estimation technique, the study found evidence of wasteful management of assets and liabilities, wrong investment policies in the industry, the banks acquire assets more than liabilities, the banks resolve into using depositors’ money to obtain assets and which failed to agree with Central Bank of Nigeria monetary policies. Jegede investigated the impact of monetary policy on commercial bank lending in Nigeria between 1988 and 2008, using macroeconomic time series variables of exchange rate, interest rate, liquidity ratio, money supply, and commercial bank loan and Advances. The study employed Vector Error Correction Mechanism of Ordinary Least Square econometric technique as the estimation method.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain impact of assets management corporation of Nigeria on the survival of distressed banks. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing an Impact of assets management corporation of Nigeria on the survival of distressed banks
Summary
This study was on impact of assets management corporation of Nigeria on the survival of distressed banks. Three objectives were raised which included: To know the extent which AMCON’s intervention affected the survival of distressed banks in Nigeria, to know the challenges encountered by AMCON in the process of reviving the distressed bank, to know the strategies that can be adopted to enhance the effectiveness of AMCON’s intervention in the survival of distressed banks in Nigeria. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from UBA in Lagos state. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
In conclusion, the Asset Management Corporation of Nigeria (AMCON) has played a crucial role in the survival of distressed banks in Nigeria. AMCON was established to address the issue of non-performing loans (NPLs) and to prevent a financial crisis. Through its intervention, AMCON has been able to take over the bad debts of distressed banks, restructure their operations, and inject fresh capital into them. This has not only helped the banks to survive but has also strengthened the banking system in Nigeria.
The impact of AMCON on the survival of distressed banks can be seen in the fact that several banks that were on the verge of collapse have been revived and are now profitable. Additionally, the intervention of AMCON has helped to restore confidence in the Nigerian banking system, which has attracted foreign investments and improved the economy of the country.
Furthermore, AMCON has also played a role in promoting corporate governance in the banking sector by ensuring that banks adopt best practices in their operations. This has led to an improvement in the overall performance of the banking industry in Nigeria.
Recommendation
AMCON should continue to collaborate with the regulatory authorities such as the Central Bank of Nigeria (CBN) and the Nigeria Deposit Insurance Corporation (NDIC) to strengthen the regulatory framework for the banking industry. This will ensure that banks operate in a more transparent and efficient manner, and that the risks of non-performing loans are minimized
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