The Role of Commercial Banks to the Industrial Development Sector in Nigeria
A Case Study United Bank for Africa (Uba) (1980-2007)
CHAPTER ONE
OBJECTIVES OF THE STUDY
The objective of this research work are stated as follows
- To determine the role of commercial banks towards a positive industrial growth and development.
- To identify and analyze the constraints and short comings facing commercial banks in Nigeria towards fund mobilization for industrial growth and development
- To examine ways in which the commercial banks in Nigeria can be made to play better roles towards fund mobilization for industrial growth and development.
- To determine and test the effect of some relevant economic variables and factors in the real gross domestic product (GDP) of Nigeria.
CHAPTER TWO
HISTORY OF UNITED BANK FOR AFRICA
United Bank For Africa Plc (UBA) is a public Limited Company incorporated in Nigeria in 1961 and headquartered in Lagos. It is one of Africa’s leading financial institutions offering universal banking to more than 7million customers across 750 branches in 19 African countries and a presence in New York, London and Paris listed on the Nigeria stock Exchange in 1970, UBA is rapidly evolving into a pan African full service financial institution. United bank for African (UBA) history dates back to 1949 when the British and French Bank Limited commercial business in Nigeria’s independence from Britain, United Bank for Africa (UBA) was incorporated in 1961 to take over the business of British and French Bank limited.
Today, United Bank for Africa Plc is the product of the merger of Nigeria’s third and fifth largest banks, namely the old United Bank for Africa and the former standard trust Bank Plc, and a Subsequent acquisition of the erstwhile Continental trust Bank Limited (CTB).The union emerged as the first successful corporate combination in the history of Nigerian Banking.
Since its historical emergence from the merger of former standard trust Bank and United Bank for Africa Plc, the bank has positioned itself to be Nigeria’s dominant bank and a leading player in Africa continent.
In 2000, Europe’s frontline finance and economy magazine, “Euro money”, named United Bank for Africa (UBA) the Best Domestic Bank in Nigeria, in recognition of the bank’s exponential growth in the past couple of years and the comparatively higher inflow of investment from global financial players.
United bank for Africa has consistently positioned itself as the bank to beat in Nigeria financially strong banking Industry.
CHAPTER THREE
RESEARCH METHODOLOGY
Applied Econometric research is concerned with the measurement of the parameters of economic relationship and with the predictions of the values of economic variables. The relationship of economic theory which can be measured with one or anther econometric technique are causal, that is, they are relationship in some variables, koutsoyiannis (1977:11) Econometric modeling which this research works makes use of three major steps which include
- Model specification
- Data collection, construction and estimation
- Model Evaluation.
The purpose of this research work however is to ascertain how and the extent to which the explanatory variables included in the model determiner the dependent variable for the period of years cover in this work.
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF RESULT
PRESENTATION OF RESULT
CHAPTER FIVE
SUMMARY, CONCLUSION AND POLICY RECOMMENDATION
SUMMARY
This research work is an econometric study of the role of commercial bank to the industrial development research employed the ordinary least square regression methods.
The explanatory data employed to analyses the role of commercial bank to industrial development growth include interest rate, exchange rate and loan.
The regression result shows tat the estimate coefficient of interest rate is inversely related to industrial development growth in Nigeria. The coefficient of interest rate is inversely related to industrial development growth in Nigeria. The coefficient of interest rate was not statistically significant at 5 % level of significance. Interest rate, which is the cost of borrowing, are not usually attractive to industries because it is widely known that high interest rate discourage investment.
The regression result also shows the estimate coefficient of loan and exchange rate which has a positive relationship with industrial growth in Nigeria. The volume of loan granted to industries determines its growth and impact in the economic.
The student T-test result showed that both Exchange rate and loan are statistically significant at 5% level of significance. The coefficient attached to real interest rate was not statistical test of significance, the multiple determinations R2 reveals that only 82% variation in industrial development growth is determined by variations in the independent variable which, include real interest rate, Exchange rate and loan while 18% remain unexplained.
The F-test shows that the model is statistically significant at 5% level of significance.
POLICY RECOMMENDATION
The banking sector especially the commercial banks is the force behind the total industrialization in any economy. Based on this fact, and revelation from the empirical analysis conducted on this sector in Nigeria, we make the following policy pronouncement.
- Commercial banks need to be strengthened to enable the sector to play its role of financial intermediary.
- The interest rate market. Must be closely monitored and all its bottlenecks removed. However, the monetary authorities must intervene in this market from time to time in order to prevent any possible wild swings of the interest rate.
- Government should seek to maintain stable exchange rate policy.
- A significant reduction in interest rate will at a stroke, bring relief to the real sector which will stimulate new investment activity.
- The deregulation of interest rate should be pursued to a logical conclusion. This is because the problem of high interest rate has actually frustrated the efforts of prospective investors from acquiring loan for investment which has in turn affected and has negative implications for industrial growth of the nation
- There should be moderation of sectoral credit limits, so that banks can give loan based on the rationality and viability of industrial projects.
CONCLUSION
Based on the above revelation in this study, we conclude that loans has a significant impact on industrial development role in Nigeria. Furthermore, the analysis reveals that real interest rate had a negative impact though not significant.
To achieve the level of industrial growth that is desired. The governments have to strive to regulate the interest rate through total liberalization or deregulation of interest in Nigeria.
With decreased rate of interest, more loans would be issued out for industrial development.
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