CHAPTER ONE

1.0         INTRODUCTION

1.1 Background of the Study.

Financial institution is the institution which collects funds from public and places them in financial assets, such as deposits, loans, and bonds, rather than tangible property or any organization in the business of moving, investing or lending money, dealing in financial instruments, or providing financial services. This includes commercial banks, thrifts, federal and state savings banks, saving and loan associations, and credit unions.

In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries.

In 1892 Nigeria's first bank, the African Banking Corporation, was established. No banking legislation existed until 1952, at which point Nigeria had three foreign banks (the Bank of British West Africa, Barclays Bank, and the British and French Bank) and two indigenous banks (the National Bank of Nigeria and the African Continental Bank) with a collective total of forty branches.

In 1952 several Nigerian members of the federal House of Assembly called for the establishment of a central bank to facilitate economic development. Although the motion was defeated, the colonial administration appointed a Bank of England official to study the issue. He advised against a central bank, questioning such a bank's effectiveness in an undeveloped capital market. In 1957 the Colonial Office sponsored another study that resulted in the establishment of a Nigerian central bank and the introduction of a Nigerian currency.

At the end of 1988, the banking system consisted of the Central Bank of Nigeria, forty-two commercial banks, and twenty four merchant banks, a substantial increase since 1986.

Other financial institutions included government-owned specialized development banks: the Nigerian Industrial Development Bank, the Nigerian Bank for Commerce and Industry, and the Nigerian Agricultural Bank, as well as the Federal Savings Banks and the Federal Mortgage Bank. Also active in Nigeria were numerous insurance companies, pension funds, and finance and leasing companies. Nigeria also had a stock exchange (established in Lagos in 1961) and a number of stockbrokerage firms.

Geographic Information System (GIS) is a complete computer system that links information about where things are located with information about what particular data represents. Unlike a paper map where 'what you see is what you get,' a GIS map can combine many layers of information.

Unlike paper map, a digital map created by GIS will have dots or points that represent features on the map such as cities, lines that represent features such as roads and areas that represent features such as lakes. GIS can be used in banking sector for proper location of new branches.

1.2         STATEMENT OF PROBLEM

The financial institutions in Awka is faced with a lot of problems such as: Finding the best new bank branch location, lack of branch performance monitoring tool, lack of customer and competitor analysis tool, lack of asset monitoring and management tool and others. GIS technology is a tool which aids in solving the aforementioned problems.

1.3         AIM AND OBJECTIVE OF THE STUDY

The Aim of the project is to show the application of Geographic information System (GIS) in management of distribution/location of financial institutions in Anambra State. This can be achieved through the following objectives;

Ø    Acquisition of base map of Anambra State showing boundary locations

Ø    Points picking of the financial institutions using GPS

Ø    Digitizing the map of Awka capital territory and showing location of financial institutions

Ø    Demonstrating through various analysis the potential of GIS in management of distribution of financial institutions.

1.4         STUDY AREA

Awka, the Capital of Anambra State was the chosen area for the study. It is located between latitudes 6°06' N and 6°16' N and longitudes 7°01' E and 7°10' E. It lies within the tropical rainforest zone of West Africa. (see figure 1). The average relative humidity is 80%. The mean daily temperature is 20°C. The inhabitants are Igbo’s and mostly Christians.

fig1a: Map of Anambra showing the study area