Banks occupy the most strategic point in the financial system of the economy. For a total of banks to fail between 1992 to 2002 a space of four years means that something definitely is wrong. Certain question have been asked. Solution proferred and prospects for the future explained but none of them seems to have solved the problem.

This study is not autagonistic of any other rather it is complementary other works have been used here and duly acknowledge but everything is with an intent to find a lasting solution to the issue of bank failure.

The major findings include inadequate attention is accorded the unorganized private sector in favour of the organized private sectors (especially the Merchant banks) a consistent erosion of their capital base due to the inflationary trends in the economy not enough attention is research and development not enough attention is accorded staff training the problem of bank failure is not systemic, it is only a few banks in industry that have failed, lack of technical expertise in most banks the fact that most bank promoters only set out for initial capital instead of appropriation and compatible follows poor internal control systems and finally banks are currently in liquidation.

To this effect the following recommendation were presented. Bank should maintain proper internal control system, emphasis more emphasis on research and development, none emphasis on staff training, maintain paid up capital structures that will be relevant to inflationary trends, government should ensure that there is an enabling environment, promoters of compatible status and management should be of high technical skill ability and dynamic.

In conclusion it will be quite expedient to point out that the Nigerian economy is still under developed one and will take the astuteness of every single Nigeria to get it out of the doldrums. It is only when the economy become stable that we shall have a very stable banking environment where failure might not be entirely absent but reduced to rate. This task is not only for the authorities. Everyone has a role to play.

Title page ii

Approval page iii

Dedication iv

Acknowledgement v

Abstract vi

Table of contents viii

1.1 The background of study 1

1.2 Statement of problem 4

1.3 Objective of study 6

1.4 Significance of study 6

1.5 Limitation of study 7

1.6 Definition of Terms 7

2.0 Review of Related Literature 10

2.1 Genesis of banking in Nigeria 10

2.2 Type of Banking in Nigeria 14

2.3 Functions of banking 19

2.4 Similarities and differences among Bank 22

2.5 Problems faced by banks 24

2.6 The concept of bank failure 25

3.0 Research methodology 26

3.1 Sources of secondary data 26

3.2 Method of analysis 26

3.3 Location of Data 27

4.0 Findings 28

4.1 General Discussion 28

5.1 Recommendations 33

5.2 Conclusion 35