CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
A bank deposit insurance scheme (DIS) is a financial guarantee to depositor particularly the small ones, in the event of a bank failure bank deposit insurance scheme developed out of the need to protect depositor, especially the uniformed, from the risk of loss and to also protect the banking system from instability occasioned by runs and loss of confidence The banking system has been singled out for this special protection because of the vital role banks play in the economy whether developed or developing. For a DIS to be effective in achieving the above objectives. It must be properly designed, well implemented by the fancy established to execute the scheme and well understood by members of the public {financial stability forum (FSF), 200}. A well designed DIS contributes to the stability of withdraw their insured deposits from banks following rumours about their financial conditions.
The establishment of Nigerian deposit insurance cooperation (NDIC) in 1988 heralded the introduction of an explicit deposit insurance scheme in Nigeria the Nigerian deposit insurance corporation is responsible for insuring the deposits at all banks and other deposit taking financial institutions licensed by the central bank of Nigeria (CBN). It also give financial and technical assistance in the interest of depositors, to banks in difficulties and in case a bank fails, it guarantee the payment of insured deposits
The corporation assists the central bank of Nigeria (CBN) in the formulation and implementation of banking policies, with a view to ensuring sound banking practice among others. The scheme was meant to argument the existing safely not by protecting depositor, thereby boosting confidence of the banking public. It was also considered as an additional frame work to serve as a substitute to the government support policy (implicit insurance) hitherto in place. Prior to the establishment of the corporation, government was unwilling to let any bank fail no matter its financial condition due to fear of the potential adverse government support over the years. However, such direct supports (implicit insurance) could not be sustained under the structural adjustment programmed introduced in 1986 which among others, deregulated the economy towards market orientation, with the establishment of the Nigerian Deposit insurance corporation scheme (NDIC), the pain of bank failure unsuitable in a market environment were reduced to a minimum while moral hazard associated with direct government support was eliminated.
1.2 STATEMENT OF THE PROBLEM
Some public opinions, particularly the press has been vociferous in the argument that the rate of proliferation in the banking industry is unmanageable and many new banks were bound to fail. it was like the regulatory authorities like Nigerian deposit insurance corporation (NDIC) were determined to avoid failure with of prudential guideline in additional to existing schedule to banking and which have indeed put the government at alert to avert any crises. All there are to assist the supervising authority in the critical evolution of banks financial position and facilitate the identification of problem in banking industry the problem facing banks also includes.
High level of intensified competition due to the liberalization of industry.
Increased systematic risk arising from increased off balance sheet transaction.
The problems of bank distress which result to loss of bring money by the bank customer.
The prevalent of fraud in the banking industry.
This research will address the challenges facing banking industry because of its tremendous impact on the economic growth of the country.
1.3 OBJECTIVE OF THE COUNTRY
The financial section has not only become incessant to the growth of the nation’s economy but has also been in the increase in recent years. The objective of the research includes;
To highlight some of the problem facing Nigerian deposit insurance corporation (NDIC) in its attempt to achieve economic growth through stability in the banking industry.
To examine who checks and solution has been proffered by the Nigerian deposit insurance corporation (NDIC) against the problems.
To examine the role of banking industry in economic growth.
To examine the prospects of Nigerian deposit insurance corporation (NDIC) in the performance of banking industry.
To recommend measures to curb the problem militating against Nigerian deposit insurance corporation (NDIC) in performing their function.
1.4 RESEARCH HYPOTHESIS
The study is based on the following hypothesis.
Ho: There is no significant relationship between effective performance of Nigerian deposit insurance corporation (NDIC) and economic growth
Hi: there is significant relationship between effective performance of Nigerian deposit insurance corporation (NDIC) and economic growth
Ho: Nigerian deposit insurance corporation (NDIC) has no significant impact on the operation of the banking industry and economic growth.
Hi: Nigerian deposit insurance corporation (NDIC) has significant impact on the operation of the banking industry and economic growth.
Ho: banking stability has no significant influence on the economic growth in Nigeria.
1.5 SIGNIFICANCE OF THE STUDY
The significance of this study cannot be emphasized and can be considered in relation to the scope of study. This research can be visualized from the effects of distress in bank that lead to loss in banking customer’s deposits.
However, banking distress has contributed immensely to the lack of economic growth in the economic of the nation.
The research will be tremdous assistance to policy market and practitioners. It will also provide to the existing literature in the field for researcher, and student in higher institution of learning can devoice various secondary sources from it.
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