ProjectClue.com We're Ready, Call Us

(+234) 07030248044

Project Topic:

MARKET INTEREST RATES AND COMMERCIAL BANK PROFITABILITY: (A CASE STUDY OF FIRST BANK OF NIGERIA PLC (2000 – 2004)

Project Information:

 Format: MS WORD ::   Chapters: 1 - 5 ::   Pages: 66 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   2,108 people found this useful

Project Department:

BANKING FINANCE UNDERGRADUATE PROJECT TOPICS, RESEARCH WORKS AND MATERIALS

Project Body:

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

The Commercial Bank System shares a very important characteristic with other members of the financial sector and the rest of the business community; the desire to maximize profits and expand its share of the market.  Commercial banks are profit-making enterprises and as such they share with other businesses the same set of expectations concerning the health of the economy.

Banks act as financial intermediaries collecting deposits from one group and lending it out to another group.  In this role they are able to convert short-term deposits into long-term loans.  They bring together people who have money to lend and people who need money.  They banks thus act as intermediaries collecting deposits and paying interest on them and making loans and charging interest on the loans made to their customers.

It will be observed that interest is the key element in the performance of this intermediation function of the commercial bank.  At high interest rates the cost of borrowing will be increased and prospective borrowers will shy away from borrowing only to show up when the interests are down.

In periods of economic upturn, commercial banks add to the money stock and thereby help to expand the demand for goods and services.  However, once the economy arrives at full employment of workers and resources, a continued expansion of loans and deposits simply add to the price level increase.

On the other hand, if banks contract loans in periods of mild economic decline experts hold that there is not likely to be a drop in the price level.  Thus banks share the general business outlook on economic conditions.  Commercial banks in the absence of regulations tend to intensify whatever phase of the business cycle is current.  This, they do through their ability to create and destroy money when making loans and investments.

Klein stated that banks have a responsibility that transcends that of other business enterprises.  They are responsible for the creation, destruction and administration of our economy.  As a consequence, hey are also responsible to great extent for the welfare of the economy.

This dual responsibility to itself as a business enterprise and to the nation puts a tremendous burden on the individual commercial bank if it acts in the national interest it may hurt its competitive positive.  If its lending policy is conservative during periods of prosperity and full employment, it reduces its potential profits since banking business in Nigeria and to evaluate their effect on bank profitability.

The banker is faced with the problem of maintaining a balance between solvency, liquidity and profitability.  Consequently, the commercial bank’s major and immediate challenge is how to manipulate the economic variables in order to ensure an optimum balance between solvency, liquidity and profitability.

The commercial banks can also be distinguished form other financial institutions primarily because of the difference in nature of their deposits liabilities and corresponding differences in the characteristics of their assets. One unique feature of the commercial bank is that they have short term, highly volatile deposit and liabilities.  That would be useful as money in the normal run of event.  They have a greater potential for credit creation more than other financial institutions.  Since they exist to serve human needs which arrives from environmental condition to stimulate economic activities to maximize profits and provide adequate liquidity level in the system.

 

It is in compliance with the above issues that First Bank of Nigeria Plc is being used as a typical example to emphasize.

 

1.2   STATEMENT OF THE PROBLEM

The Nigerian banking in recent times has witnessed so much fluctuation in market interest rates, which has called for concern.  The market interest rate controversy has been addressed by experts with a lot of pessimism with different views regarding commercial banks profitability and the economy at large following the return from deregulation of interest rates to pegging in the 1991 budget.

Profitability of banking depends on the ability of the bank to arrange and perform its activities in order to trade off optimally between solvency, liquidity and profitability.  This is by no means an easy task with the manipulation of several economic variables to the advantage of the bank.  The problems associated with this can be expressed in question for as follows.

i.            Are commercial banks in the country really profitable?

ii.          Do market interest rates affect commercial banks profitability?

iii.        If yes to what extend are effects and of what dimension, that is wither positive or negative.

 

1.3   OBJECTIVE OF STUDY

Any human endeavour that has no specified objective is bound to fall.  For this reason therefore, this study will have as its objectives the following:

i.            Determine how commercial bank in Nigeria carryout their activities.

ii.          Ascertain through the aid of available literature, the method of evaluating the profitability of commercial banks in Nigeria.

iii.        Determine factors that make commercial banks’ profitability with particular reference to interest rates.

iv.         To evaluate specifically the profitability of First Bank of Nigeria Plc.

Get the complete project »


Instant Share On Social Media:


Can't find what you are looking for?
Call (+234) 07030248044.

OTHER SIMILAR BANKING FINANCE PROJECTS AND MATERIALS

A CRITICAL ANALYSIS OF CAUSES AND PROBLEM OF FINANCIAL DISTRESS IN NIGERIA BANKING SECTOR (A CASE STUDY OF AFEX BANK PLC.)

 Format: MS WORD ::   Chapters: 1 - 5 ::   Pages: 68 ::   Attributes: Questionnaire, Data Analysis,Abstract

CHAPTER ONE INTRODUCTION The importance of capital as a necessity though not sufficient condition for economic growth is recognized in development economy where it is believed that the position of ...Continue reading »

A CRITICAL ANALYSIS OF THE USE OF FINANCIAL REPORT IN ASSESSING BANK PERFORMANCE. (A CASE STUDY UNION BANK OF NIGERIA PLC)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 72 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   4710 engagements

CHAPTER ONE INTRUDUCTION BACKGROUND OF STUDY A farmer, who plants corps, expects result, similarly to student who sits for examination expects results. The same 5 also true of an investor. For the ...Continue reading »

A CRITICAL ANALYSIS ON THE USE OF FINANCIAL STATEMENTS IN ASSESSING THE PERFORMANCE OF AN ORGANIZATION (A CASE STUDY OF FIRST BANK NIGERIA)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 72 ::   Attributes: Questionnaire, Data Analysis  ::   17923 engagements

ABSTRACT This project work is carried out to examine the contribution of micro finance banks to the development of Small and medium scale enterprises in Nigeria. The Brass micro finance bank is used a...Continue reading »

A CRITICAL APPRAISAL OF CURRENT ASSETS MANAGEMENT IN PUBLIC LIMITED LIABILITY COMPANIES

 Format: MS WORD ::   Chapters: 1 - 5  ::   Pages: 80 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   3640 engagements

ABSTRACT This project examined the management of current assets in public Limited Liability Company. It is obvious that no company can perform well without good current asset management. This cares f...Continue reading »

A CRITICAL APPRAISAL OF CURRENT ASSETS MANAGEMENT IN PUBLIC LIMITED LIABILITY COMPANIES

 Format: MS WORD ::   Chapters: 1 - 5 ::   Pages: 55 ::   Attributes: Questionnaire, Data Analysis, Abstract

CHAPTER ONE 1.0 INTRUDUCTION: Current assets as one of the management tolls of business organization are very important in the proper function of business and achievement of organizational goal. Cur...Continue reading »

A CRITICAL ASSESSMENT OF THE SURVIVAL STRATEGIES OF DEPOSIT MONEY BANKS IN A DEPRESSED ECONOMY

 Format: MS WORD ::   Chapters: 1 - 5 ::   Pages: 68 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   1808 engagements

CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY Nigerian economy is faced with national and global economic challenges and as such, the financial institutions, especially the banking sector ha...Continue reading »

What are looking for today?

WHAT OUR CUSTOMERS ARE SAYING:
  • 1. Ajimbi Oluwarotimi from Theology school osun said "Good ".
    Rating: Very Good
  • 2. Clement Abdullahi Ogiji from National Open University of Nigeria said "I am a living witness and have recommended project clue to a lot of students, so far none have been disappointed, very reliable and, trustworthy and dependable".
    Rating: Excellent
  • 3. Jhuee from Sultan national high school said "Good quality. I recommend project clue for any project research work.".
    Rating: Excellent
  • 4. Kater from FPN said "I love this website ".
    Rating: Good
  • 5. Victor from Unilorin said "Tested and trusted ".
    Rating: Very Good
  • 6. Haruna Usman Lame from Abubakar Tafawa Balewa University Bauchi said "I really enjoyed using this website am so grateful ".
    Rating: Excellent