THE ROLE OF UNIVERSAL BANKING IN THE DEVELOPED ECONOMY, PROBLEMS CHALLENGES AND PROSPECTS

CHAPTER ONE
INTRODUCTION

1.1 BACKGROUND OF THE STUDY
Universal banking system was introduced in Nigeria in December 2000. It is not a new phenomenon; it has existed in other countries at the world. The introduction of Universal Banking system in Nigeria was done to make the banking industry a financial supermarket where commercial banks can act as a financial supermarket where they can engage in insurance business, financial market business with the merger capital base of the insurance companies and the bank compelled with the fact that most of the business of the insurance companies are gotten from the banking industries. But the act also specifies the conditions that the commercial banks must meet before engaging in insurance business or capital market business.
But one thing is basic, the non-existence of the merchant banks from the above information, one want to research on the problems the Universal Banking can create to the insurance industry and the challenges it posed to the company and ways out. That the insurance industry should engage more on effective competition increase in capital bases back or inadequate financial capacity and with enough capital bases. The Nigeria industry will globally move to capital market for effective operation and competitive.

1.2 STATEMENT OF THE PROBLEM
(1) The problem the researchers want to solve is to know the problems the Universal banking will cause to the insurance industry.
(2) If there is any problem, how can such problems be handled for effective operation?
(3) To know other challenges that faces the insurance industries because of the new development.

1.3 OBJECTIVE OF THE STUDY
The objective of the study include the followings:
(1) To know why the Nigeria government introduce the universal banking act Dec 2000;
(2) To know whether the act is positive or negative to the practice of insurance companies.
(3) If it is negative, what are the challenges facing the Nigeria insurance industry in respect to the enforcement.
(4) What the insurance industry should do to alert the problems and still increase their resources in the insurance market.
(5) To eradicate the limitations of the Nigeria insurance market and operation of universal banking.

1.4 RESEARCH QUESTIONS
(1) What is universal banking?
(2) Why was it introduced in Nigeria?
(3) How does it affect the banking industry?
(4) Are the insurance industries going to survive?
(5) What are those strategies the insurance companies have to do to maintain their existence in the insurance market?
(6) How did the government classify the commercial banks capital market and insurance business by the act and a lot more.

RESEARCH HYPOTHESIS
(1) Ho: universal banking has no impart on the Insurance Industry.
Hi: universal banking has impact on the Insurance Industry.
(2) Ho: universal banking did not create problems to the Insurance Industry.
Hi: universal banking create a lot of problems to Insurance Industry.
(3) Ho: there is no way out of the problem created by universal banking.
Hi: there is a way out of the problems created by the Universal Banking.
(4) Ho: there is nothing again the insurance industry can do.
Hi: there is something the insurance can do.

1.5 SIGNIFICANCE OF THE STUDY
(1) To the researchers, it is fulfillment of the award of a degree certificate.
(2) To the investors, they will know about the universal banking.
(3) There will be also the differences in the operations as provided by the act.
(4) The banking industry will know their bounds the insurance companies and the capital market operators.
(5) Future researchers will also tap a lot of knowledge from the research
(6) It will be a base for further researcher.

1.6 SCOPE AND LIMITATIONS OF THE STUDY
The scope of the research work is Ebonyi state with references to union assurance company Enugu.
The limitations of the study are finance: as a final year student, there is no money to go into an in-depth researching through out the country so, the researcher limited it to Enugu State.
Time: the researcher is also a final year student has a lot of pressure of work and because of such pressure it is very difficult to cover the whole Nigeria.
Other problems are a panty and the level awareness of universal banking and insurance.

1.7 DEFINITIONS OF OPERATIONAL TERMS
(1) INSURANCE: this is a contract which one person called the insurer indicates in return for the agreed consideration, called premium to pay to another person called the insured a sum of money or its equivalent on the happening of a specific event.
(2) UNIVERSAL: this is belonging to affecting or done by all people or things in the world or in a particular group.
(3) BANKING: it is the business of running a banking. Banking is therefore the abstract argument, dealing with the pros and cons of banks should and do behave.
(4) GLOBALISATION: This is covering or affecting the whole world, worldwide a global form. It is also considering or including all part of something.
(5) CHALLENGES: It is the right to do something e.g reducing the jab between the rich and poor is one of the main challenges facing the government.
(6) RISK: Risk is the chance of loss. It is uncertainty of loss. The value at risk in a given insurance contract, that is the maximum amount the insurer can pay, should the insured event occur and any uncertainty and future event.
(7) PREMIUM: This is the consideration which the insured pass to the insurer in return for the insurers promise to pay sum insured (or its equivalent) in the event of a loss or damage within the term of the insurance contract.
(8) CAPITAL MARKET: Capital market is the traditional market for long-term fund. Those who need long-term capital for project of long gestation to be repaid after five years or more go to the capital market to source such fund.
(9) ACT: Act is a decree or law made by a legislative body.
(10) INDUSTRY/ COMPANY: The term industry or company means enterprises that produce something to be sold at a profit. In this case company is a synonym of factory e.g include motor vehicle factory, shoe-making factory, iron steel industry.
(11) DECREE: This is a judgement or decision of certain law courts. It can also be order given by having the force of a law.
(12) ADEQUACY: This supply means correctly satisfactory in quantity or quality. E.g she has adequate groups for a divorce.
(13) CAPITAL BASE: This is a situation whereby banks are given a specific amount of money to deposit eg when central bank of Nigeria (C.B.N) plc ask all the banks in Nigeria to deposit a sum of 25 billion Naira.
(14) MANAGEMENT: Is the social process entailing responsibilities for an effective planning and regulations of operation of an enterprises in fulfilment of a given purpose or task such responsibilities includes judgement and decision in determining plans and progress against plans.
(15) EFFICIENCY: This is the state or quality of being efficient, capable of doing something well.
(16) MAN POWER: Manpower means number of people working or number of people available for work. Power supplied by human physical effort E.g there is no enough qualified manpower to staff all the hospital.
(17) TRADE: This is the act of buying and selling of goods and services.
(18) INDIVIDUAL: Is a person of the specified sort, pleasant and unpleasant. Individual is a single human being.
(19) GROUP OF INDIVIDUAL: These are numbers of people gathered, place of acting together or mutually associations. They have something in common.
(20) MORAL HAZARD: Therefore moral hazard relates to bad behaviour or conduce of the insured in relation to the subject matter of the insurance or claim arising there from. Moral hazard may also refer to the increase in the probability of loss that result from dishonest tendencies in the character of the insured foregone.

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