ABSTRACT

The research was based on the topic “mobilizing Domestics savings for economic growth and development in the banking industry. (A case study of Union Bank of Nig PLC 1999 – 2000.

Two hypotheses were formulated, two research questions, The research design used is ex-post facto. The population of the study was all Union Bank in Enugu and a sample of one Union Bank was considered. The data was sourced from the annual report of Union bank. Regression analysis and correlation techniques were used to analyse the data. The analysis was carried out using statistical package for social sciences(SPSS).

One of the findings of these work is that Customer deposit has effect on the financial performance of Union Bank in Nigeria and that Interest rate charges has effect on the financial performance of Union Bank in Nigeria.

CHAPTER ONE

INTRODUCTION

3.1Background to the Study

It has been acknowledged that the banking play a catalytic role in t he process of economic growth and development. This acknowledgement is reinforced by contemporary conceptualism to the effect that banks are a veritable vehicle for mobilizing resources from surplus units and tempting same to deficit unit. Banks constitute perhaps the most important segment of the financial market and played a dominate role in not mobilizing savings, but also allocating them for investment purposes.

 In Nigeria, domestic savings rate is relatively low compared to most other developing countries with the same for capital income level. In the past, investment rates were high and hence there was no problem for raising funds.

 In this present economic dispensation, the drive for savings deposit has been stepped up by banks and non- bank financial institutions. It is However not sufficient because the range and type of financial assets available are equally important. There is a wide range of saving instruments offered banks and non – bank financial institutions in Nigeria today.

 Most of the voluntary and non – contractual financial savings consist of savings and time deposit.

 Another area some banks are foreseeing to mobilize funds today is the montage saving: because large number of Nigerians need accommodation of their own but fund it difficult with their menage income. Interest payment a demand deposits accounts has also some positive impact on the propensity to save. Bank have also been allowed by the government to open domaliary account for Nigerian exporters in which proceed of experts can be paid or saved until when they are needed. Transaction costs related to operating a new accounts and making deposits and withdrawals are now be coming relatively easier particularly for small savers. There is also the pension scheme which seeks to induce depositors to invest small sums of money over a specified period of time in the hope of receiving a stream of benefits upon reacting the age of retirement.

 The crisis of confidence in our banks is a great set back for the banking system. In the past the majority of those who patronized the banks did so in order to find safer place for their money. But because of the lack of confidence in banks today sizeable amount of Nigerians keep their currency or cash at home.

 This winders the financial intermediaries function of intermediation. Most of our industries depend on commercial bank assistance in form of overdraft short term and long loans for effective operation.

Statement of the Problem

Income is the greatest constraint to savings mobilization. The low level of income among the people in Nigeria constitutes a limiting factor to savings mobilization. The inadequate banking facilities in the economy in general and the rural areas in particular also constitute an obstacle to wide savings mobilization.

In the Nigerian financial sector, according to EFIA Access to financial services in Nigeria 2016 survey, indicated that about 40.1 million Nigeria adults, representing 41.6% of the adult population are financially excluded. That is, they do not have access to Deposit Money Banks, Union Bank, Mobile Money, Insurance and Pensions. Therefore, banks have the sole responsibility to approach this group of persons and make them understand the importance and benefits of saving. Not with-standing the above importance of micro financing in Nigeria. To the best of my knowledge as a researcher, not much work has been done to find out the relationship between deposit mobilization and the financial performance of micro financing in Nigeria. This therefore informs the necessity to investigate this relationship as a contribution to knowledge and an attempt to fill the research gap; hence, the decision to embark on this study. Therefore, this study is carried out to determine, if really, the financial performance of Union Bank are affected by deposit Mobilization.

1.3     Objectives of the Study

The general objective of this study is to determine the effects of deposits mobilization on the financial performance of Union Bank in Nigeria with particular reference to Union Bank Nigerian Plc. The specific objectives are:

i.            To examine the effect of customers deposits on the financial performance of Union Bank in Nigeria.

ii.            To evaluate the effect of interest rate charges on the financial performance of Union Bank in Nigeria.

1.4     Research Questions

In the light of the objective of the research, the following research questions were considered pertinent:

i.                   What is the effect of customer deposit on the financial performance of Union Bank in Nigeria?

ii.                 What is the effect of interest rate charges on the financial performance of Union Bank in Nigeria?

1.5     Research Hypotheses

In the light of the forgoing research question some hypotheses were formulated to guide the study:

H1:    Customer deposit has no effect on the financial performance of Union Bank in Nigeria.

Ho:    Customer deposit has effect on the financial performance of Microfinance           bank in Nigeria.

H1:    Interest rate charges have no effect on the financial performance of           Union Bank in Nigeria.

Ho:    Interest rate charges have effect on the financial performance of Union Bank in Nigeria.

1.6 Significance of the Study

This study intends to elicit body of knowledge and understanding of the problem of mobilizing domestic savings by banks. It is expected. That of the recommendations of this research are implemented it will help to change the banking habits of people. It will also help the managers and staff of banking industry in Nigeria to improve on their fund mobilization strategy.

 Researchers / students, lectures and the generated public will also fund the findings and recommendations of their research of value various interest areas, especially those who may wish to carry out further study on the topic in any other relate filed.

Finally, the findings from this research will be useful to future researchers in related areas, government agencies, students, bankers and even the public at large.

1.7 Scope of the Study

The case study has been considered appropriate for this research as a result of the way its branches are situated at every strategic business unit in Enugu, Nigeria. Thereby, giving way to a better assessment and analysis of data to arrive at a high degree of accuracy through the collection of data. The study covers a period of ten (10) years (2005– 2014).

1.8 Definition of Terms

Interest rate: Is the amount of interest due per period, as a proportion of the amount lent, deposited or borrowed. It refers to the interest rate in Union Bank. (Homer, Sylla, R.E; Sylla, R. (1996)

Savings: This is that part of income that is not consumed immediately but deferred for investment or future consumption.

Domestic Savings: This consist savings from the citizens of the country and not from foreigners.

CBN: Central Bank of Nigeria the apex financial institution in the country

Nigerian Banking Industry: These countries of the banking institutions in the country which include the commercial banks, Merchant banks, development banks etc. with the control Apex Bank CBN. 

Union Bank of Nigeria PLC: This is of the leading banks in the country both by deposit and assets wish 283 branches.

Banker: A banker could be send to be one who works in on institution licensed to carry on the business of banking.

Distress: A bank may be classified distress when it is unable to meet the bank examination rating system.

BOFID: Banks and other financial institutions Decree.

Rural Banking: This involves the establishment of banks in rural areas to cultivate banking habit among the rural areas.

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