CHAPTER ONE

INTRODUCTION

1.1      Background of the study

The federal government of Nigeria 1990 budget speech decided to establish community bank in order to strengthen its programmes of grassroots economic development.  The fundamental concept of a community banks is of a self-sustaining financial institution, owned and managed by a community for the purpose of providing credit deposit, banking and the service to its members.  It is designed to ensure that a community may establish a community bank for the purpose fo promoting rural development throughout the provision of finance and banking service improving the economic status of small scale producers both in the rural and urban areas, enhancing the rapid development of production activities especially in the rural economic growth in Nigeria.  A bank licensed under the community bank decree shall accept from persons various types of deposit including savings and time savings.Receive or collect money on behalf of its customers, operate equipment leasing facilities which are designed to ensure access of its customer to farm input.  Community bank in Nigeria banking system dates back to 1990 when the budget speech was delivered by the president commander in Chief of the Armed Forces, General Ibrahim Babangida.

1.2 STATEMENT OF THE PROBLEM

The statement of the problem includes the following: -

1.   How can loan able funds made accessible to rural borrowers to enhance their economic activities?

2.   How can the loan be secured other than asking for tangible security like collateral?

3.   How rural banking habit can be improved to assist I rural development?

1.3 OBJECTIVE OF THE STUDY

The studies conducted by the researcher on the role of

Community banks in rural development reveal that the objective of the study includes the following: -

1.   To determine how rural dwellers had responded to the services of community banks.

2.   To identify the type of customer that patronizes community banks.

3.   To determine the type of services that is rendered to the public by the community banks.

4.  To ascertain the extent to which granting of loan to rural dwellers has any effect on unemployment level.

5.  To determine if any there non-banking services that are rendered to the public by the community banks.

6.   To examine if the availability of the loan has reduced the level of rural urban migration.

1.4 RESEARCH HYPOTHESES

For the successful completion of the study, the following research hypotheses were formulated by the researcher; 

H0: there is no type of services that is rendered to the public by the community banks.

H1: there is type of services that is rendered to the public by the community banks

H02:there are no types of customer that patronizes community banks

H2:there are types of customer that patronizes community banks

1.5 SIGNIFICANCE OF THE STUDY

This research work will be of immense help to thegovernment especially the rural development authority, as it will give them the opportunity to assess their performance in rural development.  It will also be a great value to the community banks to assess their performance.Hence, it will be beneficial to the generality of the public.  It will also be of a great importance to people carryout research in related topic.  The study is as much as it attempts to achieve the purpose of promoting the rural development by providing financial and banking services, credit and deposit services as well as other facilities.  It is also to achieve the festering of the spirit of community ownership and of economic assets and its maintenance on a suitable basis.  To the economy at large, this study is of a great value since rural development involves providing those social amenities in the urban area to the rural area.  This to some extent restricts the usual movement.  Restriction will lead to the promotion of rural financial and banking services and integrated national financial system that responds to the need of the whole economy.

1.6 SCOPE AND LIMITATION OF THE STUDY

The scope of the study covers the role of community bank in rural development of Nigeria. The researcher encounters some constrain which limited the scope of the study;

a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study       

b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.

c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities. 

1.7DEFINITION OF TERMS

For the purpose of this research work, the definition ofterms used with the UN Standard Industrial classification of economic activities.

1. Economic:  Is the study of how a society organizes its money, in order to encourage its nation.

2.   Rural Areas:  In a little communities that is not as larging like the city

3.   Community: Is all the people living in a particular area.

4.   Community Bank: Is a self sustaining financial institution owned by a community or a group of community.

5.   Loanable: This is the money that can organization such as a bank lend out money.

6.  Funds: Is the amount of money that has been saved or that has been made available for a particular purpose

1.8 ORGANIZATION OF THE STUDY

This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study

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