SOCIAL CULTURAL VARIABLES AND PRACTICES OF NIGERIAN FINANCIAL INSTITUTIONS

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

The environment in which financial transactions are carried out in the 21st century is an intertwined force of complex socio-cultural, economic, political and technological factors creating intricate challenges for financial institutions all over the world (Tesfayohannes, 2012). This growing complexity has created challenges for Nigerian financial institutions as a study by KPMG (2012), titled ‘Confronting Complexity’ identified common factors in the Nigerian financial institutions among which are the increased cost of business; greater number of risks; difficulty in making financial decisions; delay in deals and transactions. George (2011), succinctly captured the importance of socio-cultural realities on the practices of financial institutions and revealed that considerable socio-cultural difference exist between Nigeria and Great Britain making it difficult to transfer practices in financial institutions from one area to another given the trend in globalization, multi-nationalisation and internationalization of financial transactions. Socio-cultural realities remain an important component of the practices in Nigeria financial institutions as they influence transactions, technology and performance, (Odekunle, 1989; Olaoye, 2003; Aghalino, 1998; Odetola & Ademola 1986). However, rapid changes in the global banking landscape such as technology, transport, trade, commerce, communication, are currently affecting financial institution generally in Africa, who are intrinsically attitudinal, and sedentary (Ekeledo & Bewayo, 2009).

Likewise, Aldrich and Zimmer (1986) specify the importance of socio-cultural realities in the practices of financial institutions in their transactions which they contend is entrenched in social perspective. The socio-cultural aspect deals with the institutions, norms, roles and values as they exist outside the individual financial institutions and the latter captures the subjective aspect of culture as demonstrated by individual‘s perception of the components of the cultural system.