PROJECT
BY
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EE/2017/167
SUBMITTED TO
DEPARTMENT OF ELECTRICAL ELECTRONIC ENGINEERING FACULTY OF ENGINEERING CARITAS UNIVERSITY, AMORJI-NIKE, ENUGU.
IN PARTIAL FULFILLMENT OF THE REQUIREMENT FOR THE AWARD OF BACHELOR OF ENGINEERING (B.ENG)
APPROVAL PAGE
This project has been read and approved by the undersigned as with the requirement at the department of Electrical Electronic Engineering of Caritas University Amorji Nike Enugu for the award of Bachelor of Engineering (B.Eng.) in Electrical Electronic Engineering.
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Engr. Ejimorfor Date
(Project supervisor)
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Engr. Ejimofor Date
(Head of Department)
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External Supervisor Date
DECLARATION
I declare that this project material is an original work done by me under the supervision of Engr. Ejimorfor, department of electrical electronic engineering faculty of engineering caritas university, amorji-nike, enugu
DEDICATION
This project is dedicated to Almighty God and to my parents Engr. & Mrs. Chukwu A. Orioha and to my beloved brothers and sisters whose ever loving kindness and support has seen me through my years of studies.
ACKNOWLEDGEMENT
I wish to express my immense gratitude to God Almighty for his mercy, guidance and protection towards me for seeing me through the rigors of this work. I am greatly indebted to my supervisor Engr. Ejimofor for his kind gesture and whose critics lead to the achievement of this work. I also will remain grateful to the tremendous contribution of my lecturers Engr. Ojobor (the Dean of Engineering Faculty), Engr. Ejimofor (Head of Electrical Electronic Engineering Department), Engr. Mbah, Engr. Ochi, and all the staff of Electrical Electronic Engineering both academic and non academic staff for their intellectual upbringing. My special appreciation goes to my loving parents Engr. & Mrs. Chukwu A. Orioha, my grandparent, my uncles and aunties, my brothers and sisters whose moral and financial support cannot be over emphasized. Also my sincere gratitude and special regards to my friends too many to mention whose encouragement also lead to the success of this work.
The purpose of this study is to examine the changing trends of the global financial crisis and its effects on the Nigeria economy. It aims to study the rising success of the policy responds by the Central Bank of Nigeria, using banking sector and the economy as a focal point. Descriptive method data analysis is used to analysis the data collected for the research, the finding from the banking officials of the First Bank Plc on the research topic. The research results show that Nigeria economy has achieved a medium or even high level of implementation policy by Central Bank of Nigeria (CBN) to constraint complexity and widespread of Global Financial Crisis (GFC) in the economy, and implored adequately, stability comprehensive measures to address the future penetrated of the financial crisis. It was recommended that the immediate response of the CBN to ensure the maintenance of the banking system stability and injecting liquidity into the system and prudential supervision and regulation of the financial sector
CHAPTER ONE
- INTRODUCTION
The banking sector stimulates growth and development in an economy by serving as the transmission channel for resources to the real sector. It provides access to financial services and improves the efficiency of other financial intermediaries in a stable macro-economic environment. The sector has recently witnessed monumental challenges in the intermediary functions because of the global financial meltdown that took center stage between August and November 2008. The meltdown that began from sub-prime mortgage uncertainty at a point within United State US systematically accidentally flow over to other areas of world become full by the integration of the world financial sectors and the impact of globalization (Ronald 2008 and John 2013, Igbatayo 2011). Period of economic mismanagement in both government establishment as well as private organization fast track the level of a global economic meltdown. All continents economies support with different set of ideas and policy, banking and others financial institutional was fast affected in the way that you cannot afford or prevent web of many different kinds networks which are the emergence of globalization, the exist situation of globalization, economic crisis are no more limits to one country, and the economic community Mark (2008). Economy of the nation has given proof and evidence of vulnerability to the emergent global economic crisis Igbatayo (2011). Nigeria economy, the emergent global crisis has influenced negatively effects on Nigeria financial institution; cause sudden unrest in banks sectors and the stock market. Banking industries are frightened especially stiff and difficult, making the monetary authority Central Bank to inject more than N400 Billion naira or US$2.72 billion into vulnerable banks to sustain and prevent the institution from total collapse Ogbuagu (2014). This policy may have salvaged the financial sectors from collapsing totally but its effect is still have been felt in some sectors Agu (2011). In the capital market, equity prices, in the past couple of years, have fallen sharply, with the All-Share Index at the Nigerian Stock Exchange down by 33 percent at the end of December 2009, from levels recorded in December 2008. The instability in Nigeria’s financial markets poses severe challenges to policy makers, requiring urgent measures to stem the tide. During period of 2008/2009 global financial crisis were very vital a challenge to the nation economy. The country economy had shown certain vulnerability to the states of global economic meltdown. Moreover, influence by crude oil and gas, the Nigeria economy attached on the petroleum sector, which contributed about 80 percent of government’s annual revenue and foreign exchange earnings. The petroleum industry also influences to the economy up to 50 percent of Nigeria’s annual GDP. The global oil and gas sectors get very great price increases in connection with sustained economic growth all over the world up to the mid-2008, when price of crude oil extremely at US$147.00 per barrel Olu (2009). During the time that increased, Nigeria started to enjoyed dividend of crude oil price upturned, substantial increases in foreign exchange reserves to an extend level that has never happened before to about US$60 billion Igbatayo (2011).
The question about severity and depth of the global financial crisis (GFC) on Nigeria banking sector remain unanswered An unprecedented collapse of financial institution, loss in asset/value/share price in particularly of mortgage back securities, stock market crashes, speculative bubbles, Currency crisis and Losses of job (unemployment) among others are some of the effect of global financial crisis (GFC).
According to Previous, studies have highlighted the effect of global financial meltdown on Nigeria economy Adamu (2009). Omotola (2007). Ngwube, Ogbuagu (2014) Felix, Rebecca (2015). They were mainly focused on the economy
1.1 BACKGROUND OF THE STUDY
The global financial crisis, of which the aftermath is still being felt, has been tagged the most severe financial crisis experienced by the world since the great depression of the last century. The crisis had an unprecedented impact on credit and capital, taking offshoot from the financial markets in the US, with the contagion and impact spreading unevenly across the globe.
The “home for all” program which started in U.S in 2004 finally met its waterloo,as refinancing became more difficult; major global financial institutions that had borrowed and invested heavily in subprime mortgage, reported significant losses as borrowers during the boom were now unable to service their due loans. Starting with credit squeeze, reduction in household demand, rise in unemployment and falling housing prices in late 2005 to 2006, the bubble finally ruptured, and heralded the sub-prime mortgage crisis with multiplier effect in 2007.The crises causedmajor business failures, with consumer wealth falling by trillions of dollars, and economic activity dipping considerably,engendering the European sovereign-debt crisis and the2008-2012 global recession era.
In Nigeria, the effect of the crisis was not felt until the mid-2008. World economic interdependence gave room to the financial crisis in all economies of the world including Nigeria. The sell off by foreign investor affected the stock market and the economic downturn in US (a major export destination for the Nigeria Crude oil) affectedthe demand and thereby price of oil.With most economies staring down the barrel of the imminent second wave of effects of the financial crisis, they were left with no other option than to enact policy strategies/measures that will hedge or combat this likely impact on their respective economies.
1.2 OBJECTIVE OF THE STUDY
The objective of this study is to analyze the impact of the global financial crisis on the Nigerian economy and to analyze the immediate changes posed by the GFC on the Nigeria banking sector and focus on the initial policy response of the monetary authorities in order to save the banking sector from going into distress.
1.3 PURPOSE OF THE STUDY
This paper, therefore intends to analyze the immediate changes posed by the GFC on the Nigeria banking sector and focus on the initial policy response of the monetary authorities in order to save the banking sector from going into distress. In addition, if there is relationship between GFC and current Nigeria economy recession.
1.4 SIGNIFICANCE OF THE PROJECT
This study aims to estimate the effects of the global economic and financial crisis on the Nigeria economy. We analyse the most important transmission channels of the crisis, and compare the effects on the key macroeconomic variables. We also analyse the monetary policy, and the effects it had on counteracting the consequences from the crisis. The effects of the crisis on the economy are analysed via the counterfactual scenario approach. This empirical approach consists of building counterfactual, hypothetical scenarios for economic movements in absence of the crisis. Such hypothetical scenarios. are then compared to actual outcomes in order to assess the impact of the particular crisis factor on key macroeconomic variables. It is expected that the counterfactual approach will yield additional valuable insight into the effects of the crisis on the Nigerian economy. By doing so, it would also complement two other studies that use different approaches to analyse the effects of the crisis on the Nigerian economy.
1.5 HYPOTHESIS OF THE STUDY
In this study, the hypothesis tested is basically related to the Impact of the Global Financial Crisis on the Nigerian economy:
H0: The global financial crisis has no significant effect on the Nigerian economy
H1: The global financial crisis has significant effect on the Nigerian economy
The hypothesis will be tested at 5% level of significance. The objective of this study is to: Analyze how the global financial crisis has affected the Nigerian economy.
1.6 RESEARCH QUESTIONS
(1) Has the global financial crisis affected the Nigerian economy?
(2) In what way has global financial crisis affected the Nigerian economy?
(3) in what way does Banks and other financial institution contributes to Nigeria economy?
(4) What are the causes of financial crisis in Nigeria?
1.7 DEFINITION OF TERMS
CBN - Central Bank of Nigeria
GFC - Global Financial Crisis
SEC - Security and Exchange Commission
NSE - Nigerian Stock Exchange
(ASI) - All share index
(MC) - market capitalization
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