Abstract
This project work was focused on the impact of globalization on Nigeria banking sector and various theoretical and literature issues were discussed. An empirical force affects the Nigerian banking sector, using the ordinary least square estimation (OLS) techniques called the exact AR Newton Raphson method. Data collected were presented in tables and percentages for easy understanding. The findings revealed that there is no significant relationship between bank capital base and foreign private investment. Given the findings of this study, it was concluded that the compact of globalization has note only benefited Nigerian banks but has also created threat or challenge to Nigerian banks and policy makers. However, it was recommended that globalization promoting the provision of adequate and productive credit to users policy measures must be put into actions to gear up stakeholders towards reducing the negative impact of globalization on Nigerian banking sector.
CHAPTER ONE
INTRODUCTION
1.1Background to the Study
The role of the banking system as an engine of economic growth is appreciated by the functions, the constituency performs. The banking sector provides liquidity that services the needs of the economy, facilitates the mobilization of surplus funds from both domestic and foreign sources and optimally allocates such mobilized resources to deficit economic limits for product investment. The banking system also provides infrastructure for monetary policy transmission among other thing. In recent years the Nigerian banking sector has been hit by three major trends namely deregulation and privatization the introduction of new technologies and new products and the entry of new competitors. These trends were the outcome of forces of globalization.
According to Fajigbesi and Ozughalu (2003) globalization is face with some challenges which do affects the banking sector especially the immensely baking system from this a consensus has emerged in recent decades emphasizing the critical role of globalization in the process of Nigerian banking sector development.
Globalization implies that there will be massive presence of foreign banks in Nigeria with the influx of foreign banks, there will be tremendous increase in the degree of competition in the degree of competition in the Nigeria banking sector. Indeed, the banking sector in Nigeria is bound to face global financial system, the survival of banks in Nigeria will be to a large extents depend on hour well they understand the intricacies of globalization and how well they are prepared to operate with in the new system.
Until recently, Nigeria banking system have not performed impressively when compare to other region for instance power and energy has not grow to the expected level, technologically Nigeria is still behind in operation, basically the imfrastral system of the country is yet to be upgraded to a necessary standard. However, Nigeria banking sector experience significant gains in the current re-capitalization of Nigeria banks. These changes took place within the context of globalization/ internationalization policies and reflect part effort by Nigeria government to integrate Nigerian banks into the global financial market.
The recent concern about growth of Nigeria Banking Sector is the impact of globalization to the sector as revealed by Obadan (2003). The Banking sector plays a critical role in liberating a country’s wheels for beneficial participation in the dynamics of globalization.
Undoubtedly, globalization has impacted on most factors identified in the literature to be determinants of changes in the banking sector. The nature of these relationship need to be ascertained the study of these type, is therefore warranted since it’s major objective is to examine empirically the impact of globalization the Nigeria banking sector.
1.2 Statement of Problem
The crux of this study is to find out the impact of globalization in Nigeria banking system, and how Nigeria banking sector can benefit and manage the cost of globalization, with regards to the above researcher one of the view to review existing literature and fill the gap that exist by proffering possible solutions is to identify problem.
1.3 Research Questions
1. What are the globalization factors that affect the Nigerian Banking Sector?
2. What are the cost benefits of globalization to Nigerian Banking System?
3. What are the preconditions for banking sector globalization?
4. To what extent has foreign banks penetrated Nigerian banking system?
5. How can the banking system be prepared for the challenges of globalization?
1.4 Objective of the Study
The main principal objective of this study is to empirically investigate the impact of globalization on Nigerian banking system. Specifically the objectives of the study will also include.
1. To identify the major globalization indicators that affect Nigerian banking system.
2. To identify the cost and benefit of banking sector globalization.
3. To find out the pre-conditions for globalization in the Nigerian Banking Sector.
4. To evaluate the penetrator of foreign bank on Nigerian Banking System.
5. To appraise policy measure of government towards ensuring Nigeria banks benefits from globalization.
1.5 Statement of Hypotheses
In order to achieve the objectives of this study the following hypothesis are stated.
Hypothesis One
Ho: There is no significant relationship between banks capital base and economic growth.
HI: There is significant relationship between banks and capital base and economic growth.
Hypothesis Two
Ho: There is no significant relationship between bank capital base and foreign private investment.
HI: There is a significant relationship between bank capital base and foreign private investment.
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