EFFECTS OF BANK DISTRESS ON THE SAVING HABITS OF THE RURAL DWELLERS. A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE
This research work examined the “Effect of Bank distress on the saving habit of the rural dwellers” it investigated the causes and characteristic of bank distress in the Nigerian economy.
Many related literature were reviewed as the researchers collected data for this work. In remote communities where banking habit was poorly developed the exercise of changing bank notes in 1984 forced people to travel scores of mills to change their money and also made them realize that they need banks around incessant call for extension of bank branches to their areas. The effect of bank distress on the economy on the other hand included the erosion of public confidence mostly to the rural dwellers in putting their money in the banks.
1.1 BACKGROUND OF STUDY
A bank can be defined as an organization whose principal operation are concerned with the accumulation of temporarily idle money of the general public from the purpose of advancing to others for expenditures.
John page defined a bank “A corporation or person(s) who accept money on current account, pays cheques on such account on demand and collects cheque for customers”
Oxfords advanced learners Dictionary define a bank as an organization or a place that provides a financial services or a place where something is stored ready for use.
The establishment of modern banking in Nigeria dates back to the colonial when the African Banking corporation was formed in 1892 to distribute currency notes of Bank of England for the British Treasury subsequent developments were encouraged by colonial trade. In the bid to address the credit needs of indigenous enterprises, Nigerian late ventured into the banking business, initially through private individual initiatives and later through deliberate government policy.
The problem of distress in the financial sector, including outright bank failure, has been observed in Nigeria as back as 1930 when the first bank failure was reported indeed, between 1930 and 1958 when the central bank of Nigeria (CBN) was establishment over 21 bank failure were recorded.
However, the degree of intensity and scope of the distress has never been as serious as has been observed since June 1989 when government directive to withdraw deposits of government and other public sector institution from bank to the CBN exposed the weak financial condition of most financial institution and the severity of problem has progressively here used.
The distressed condition has been traced to a wide range of causes, some of which are listed on literature review. Eventually, when distress came to into the scene, fears of loosing fund to the banks influenced negatively, the banking habit of the rural dwellers.