This study examines critically the relationship between financial institution and the economy as a whole. 

The flow of funds within an economy provides a useful starting points for looking of a country's financial system. The great roles the banks play in the implementation of government monetary policies as a factor which out them right as the Centre of economic policy of a country. 

This study also was embarked upon with the intention of determining the 'role of financial institution in the development of Nigerian economy with emphasis on banking sector. 

This study observes from the hypothesis tested that financial institutions particularly Banks are very much aware of their financial intermediaries roles. The project attempted to find out whether financial intermediaries roles and other roles that are expected of them in terms of economic crisis. 

The major sources of the data used in the process of this research work are the primary and the secondary data. The idea Statistical tool adopted for the purpose of this study is the statistical package for social science (SPSS). 


Title Page  





Table of Content


1.1 Introduction 

1.2 Purpose of Study

1.3 Scope of Study 

1.4 Limitation of Study 

1.5 Historical Background of Wema Bank PIc 

1.6 Project Budget 

1.7 Problem of Study


2.1 Evolution and Development of Banking in Nigeria  

2.2 Financial Intermediation and Economic Development

2.3 Review of Some Related Literature 

2.4 The Relationship between Financial Institutions and the Economy as a Whole  

2.5 The Banking System and the Management of the Nigeria Economy 

2.6 Criticism of E-Banking System and the Constraints facing it 

2.7 The Expected Roles of banking Sector in a Depressed Economy 

2.8 The Operation of commercial Bank in Nigeria 


3.0 Introduction 

3.1 Method of Data Collection 

3.2 Population and Sampling 

3.3 Research Instrument

3.4 Techniques Data Analysis 

3.5 Conduct of field Work 


4.0 Introduction 

4.1 Analysis of part One (General) 

4.2 Test of Hypothesis 


5.1 Summary 

5.2 Conclusion 

5.3 Recommendation





A financial institution can be defined as any institution which portfolios of assets consist largely of claims rather than inventory, plant and equipment. Financial institution serves as intermediaries in the financial markets. 

However, since emphasis will be placed in banking sector as a financial institution. It will be proper at this point to make known what the banking sector entails and its role in the development of Nigerian economy. 

The banking industry is of tremendous relevance to the economic development of any nation in the sense that it is responsible for the allocation of funds to different sectors and sub-sectors of the entire economy. These sectors include agriculture, manufacturing, mining, construction, transportation, tourism, to mention but a few. The economic situation of Nigeria today is of great concern to all and this led to the introduction of different measures by the Federal Government to bail the economy out of total collapse. 

The introduction of economic measure such as privatization of government parastatals, the Foreign Exchange Market, and then the fate of Naira is being determined by the forces of supply and demand. And the structural adjustment programmed. All these activities are being involved by the banking industry for adequate implementation in order for the government to achieve its aims on restricting the country's economy. 

The recent increase witnessed in the number of commercial and merchant banks in the .country to satisfy the demand of the increasing population on business financing and other financial related areas has necessitated a careful look at the activities of this industry, its relevance, with a view to explain its vital role to the economic development of Nigeria. 

Primarily, a bank is a financial institution where money and other valuables such as gold, certification, wills share certificates, to mention but a few, are kept for custody. In modern day banking however, this function has been enlarged and obviously modified. Hence, present day banking would be modified as the art of safekeeping, exchanging, lending and borrowing as well as an advisory services for all which combine to make money available or funds and immediately put to effective utilization. 

Banks in this regard constitution most important points upon which the wheel of the economy in general rotates. In the economically development countries such as the United States, United Kingdom, 

Canada, Banks perform such additional functions as setting and clearance of daily credit purchase cards and night saving facilities which are services not available in developing countries of Africa. 

In Nigeria, there is a remarkable increase in the function performed by our banks. This include acceptance of deposits account holders, granting of loans and advances, foreign exchange, discounting bills of exchanges loan syndication, equipment leasing, effecting merging and acquisition of companies. Also banks offer financial advice to numerous customers. 

Financing developmental projects, issuance of letter of credit to their customer, acting as Trustees and Executors and Agents in the buying and selling of Stock Exchange Securities on behalf of customers. 


These have been rumored that financial institutions are not helping the revamping of the economy but aremore interested in making profits, not only profits but large profits that are supposed to be plunged back in the economy but are not. 

The purpose of this study with special reference to the banking industry is therefore to find out the roles actually played by the banks onthe present state of economy i.e. to come to a conclusion as to whether these roles are effectively developing the economy. 


In view of the greater role played by the financial institutions in executing government policies aims at developing the Nigerian economy and in view of the fact that the banking sector touches every sector of the Nigerian economy, it is important to limit the study of the role played by the banking industry with a brief mention of the insurance industry, the Nigerian Stock Exchange and a few other financial institutions. 


In actual, no one can boldly state or give the time picture of what future have for him but one can still do this to some extent based on one's experiences of the past, and the present condition. In the light of the above, the researcher can state as follows the limitation likely to be encountered in carrying out this research: 


To be specific, time can never be enough since any research work is based on finding out facts in which all now changes are known. And most importantly, changes occur almost every day. 


This is yet another constraint in that to carry out any research, a lot of money is usually being spent - transportation, typing, binding. 


The above mentioned constraints in tum affect geographical coverage of this work in that both are used in implementing the later. Moreover, some Nigerian economy covers the whole country; there will be no time, money to cover all the geographical regions. In the light of the above, the research will be carried out in Lagos. 


Wema Bank PIc is a Commercial Banking Institution Incorporated in 1945 as a private Limited Liability financial institution under its old name, Agbonmagbe Bank Limited. 

The bank with a modest beginning now has over 154 branches at various major locations in Nigeria. It has also effective connection in the business centre of the world, allowing the bank to offer fast and efficient banking services within and outside Nigeria. The bank functions are regulated by a general policy formulated, approved by the board that embodied operational, accounting personnel, lending and expansion policies. 

Recent time has seen tremendous growth in all sphere of its operations. 

There has also been a phenomenal expansion in its clientele among who are statutory corporations, agriculturist, state and local governments, commercial houses, industrialist, on a cross-section of the general public. The bank is presently directed by a vividly and Dynamic board in whose hands its future development lays. 

Physical development and computerization of the bank, apart from the bank's purchase for strong and functional physical structure, the interplay of real aesthetic beauty and value depicts the uniqueness in the overall design of Wema Bank, Urban, Semi-Urban and Rural branches. 

The bank's branches at Apata, Tponri, Edun-Abon Mokola, Olubadan, Dopemu, Ondo Town and a host of others are just a few example of its uniqueness in architectural design. 

At a time when Computer Technology is being introduce as a way of enhancing qualify and fats service in the banking industry. Wema Bank has in fact successfully computerized its Head Office Account and a greater number its branches. 

Details comprehensive plans are already a foot computerized the few remaining branches. 

This is not only in consonance with modem banking needs; it also underscores the desire to deliver their services with minimum delay in a relatively conducive environment. 

Also, a strategic business unit which is aimed at planning for the future of the bank as' well as making it to stay afloat in the country's present harsh economy condition has been set up. 

Wema Bank's corporate ambition propelled by the ever interesting need to consolidate as well as improve as its achievements has led to the introduction of many products enumerated below. 

Financial Services: 

⦁ Overdraft 

⦁ Short-term and medium-term loans 

⦁ Bankers Acceptance/Commercial Papers 

⦁ Guarantees

⦁ Bills discounting

⦁ Performance services 

Corporate Services: 

• Participation in loan syndication 

• Trade finance 

• Export finance 

• Equipment leasing 

• Advance to corporate clients 

Financial Advisory Services: 

• Business advisory services are also provided free of charge to the customers of the banks. 

International Financial Services: 

• Invisible trade transaction (i.e. buying and selling of foreign currencies, personal home remittances). 

• Visible track transaction 

• Export services. 


For any project to be successfully executed in which research is no exemption, a certain sum of money has to be earmarked, fixed or budgeted for it. Through it might not accurate but it is good not to be surpass amount budgeted for. However, in carrying out this research, the amount can be broken down as follows: 

Transportation 1,500.00 

Typing 4,500.00 

Binding 2,000.00 

Data collection 3,000.00 

Miscellaneous 1,500.00



In depressed economic as experienced in Nigeria. The banks are hampered in carrying out their rates in revamping the economic by a number of factors. One of their major difficulties is in connection with existing loans and advance to the public sector which are long overdue.

The amount as at the end of 1991 was put at N23.5 billion and was owed to the banks by various state government and their agencies. 

N34.6billion as at 2011. A substantial proportion of these debts arose out of credit to state government for the direct payment of wages and other emoluments to their employees and credit provided to the governments and their agencies for financing various project. 

In addition to these direct lending to the government arid their agencies, the banks have also made huge lending to many contractors who had worked for the government and their agencies and who were yet to be paid for such projects or other jobs performed. Although some improvements in the repayment and saving of these overdue loans and advances have been made, what remains outstanding continues to determine the amount of progress the banks could ensure, made In sustaining the nation economy by recycling lending into more productive areas. This capital market is still fading a lack of general public awareness about the securities business. The surrounded by mysticism among the general public. This state of ignorance can be exploited by unscrupulous individuals at the expense of the general public. 

Furthermore, there is a high disproportion between demand and supply of securities as many indigenous businesses are adverse to public quotation of their businesses mostly for fear of losing control. 




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