CONTRIBUTION OF COMMUNITY BANKS IN THE DEVELOPMENT OF RURAL AREA OF ANAMBRA STATE, A STUDY OF FOUR DIFFERENT BANKS

CONTRIBUTION OF COMMUNITY BANKS IN THE DEVELOPMENT OF RURAL AREA OF ANAMBRA STATE, A STUDY OF FOUR DIFFERENT BANKS

Background Of The Study

The activity that is referred to as "banking" refers to the procedure by which individuals who need money for immediate and justifiable reasons are able to borrow such money in a timely manner. To put it another way, banking may be seen as the act of mediating between units of spending that are in deficit and units of spending that are in surplus. A financial institution that has been granted permission to act as an intermediary between an economy's deficit spending unit and its surplus spending unit is known as a bank (Jude, 2022).

It is the role of the Nigerian financial system to provide a relationship between the deficit spending unit and the surplus spending unit. Because it is tasked with the responsibility of mobilizing and providing credit and financial facilities and the extension of these facilities to the business sector as well as to needy individuals in order to enhance and promote investment, which is the bedrock of economic development, the banking system, which is an integral part of the financial system, occupies a unique position in the facilitation and acceleration of the development of the economy. This is because the banking system is an integral part of the financial system, and because it is an integral part of the banking system (Smile, 2021).

Through the formation of the Bank of British West Africa in 1882, the colonial overlords of Nigeria were the ones who first brought banking into the Nigerian domestic economy. This occurred in the historical past. At the present time, Nigeria's banking system is comprised of more than a thousand separate financial institutions in total. Each group of banks has its own area of concentration that is catered to and packaged according to the particular requirements of the financial market (Ahmed 2019). For example, the commercial bank is tasked with the responsibility of accepting short-term liabilities (deposits) and deals on short-term lending, the merchant bank typically accepts medium-term and long-term liabilities (time deposits) and deals on medium-term and long-term lending, and the development bank is established specifically to contribute to the development of specific sectors of the economy (Ekezie: 1997) for instance, the Nigerian Industrial Development B. is established specifically to contribute to the development of the Nigerian industrial sector.

Before the year 1997, the rural sector of the Nigerian economy was primarily defined by economic underdevelopment as a result of the lack of a strong and lively credit system, which is inevitably essential for economic progress. This situation persisted until 1997. This was the reasoning for the hunt for a viable solution to monetize the rural economy of the country in order to sidestep the widespread and uncontrolled practice of money hoarding that was being fostered by the surplus spending unit inside the rural sector (Flora, 2022).

The Rural Banking Scheme, which is also known as the Grass-root Banking Scheme, is the most recent banking strategy that has been implemented within the Nigerian Financial sector. It was first implemented into the Nigerian financial system in the year 1997 with the purpose of collecting savings from rural areas in preparation for the distribution of credit to agricultural small-scale producers and farmers. At the moment, the community bank is the kind of financial institution that is in charge of banking in rural areas in Nigeria. An offspring of the Peoples banking operations that were founded by the decree No. 20 of 1990 was the Community banking operations, which were established in June of 1992 by the decree No. 46. In reality, the establishment of people's banks was necessitated by the failure of a rural branch banking plan that was implemented in 1976.

Community banks play a significant role in the financial life of Anambra State, Nigeria's rural population, and the state's agricultural banking. In other words, the rural banking scheme in Anambra State is associated with the establishment of community banks within the rural areas of the state to take care of savings and credits within their respective host communities. These community banks can be found in the rural areas of the state. There were approximately one hundred local banks operating within the state as of December 2001. Ibeto Community Bank Nnewi was the first community bank to start doing business in the state when it opened its doors. It first opened its doors in 1992. In light of the information presented above, the purpose of this research is to evaluate the contribution of community banks to the growth of rural areas in the state of Anambra through an examination of four different banks.

1.2 Statement Of Problem

This study was inspired by the fact that community banks in Anambra State were basically established to fill a gap in the Nigerian financial system. This gap is the result of the fact that the majority of the Nigerian population (those who live in the rural areas) have been denied adequate banking and credit facilities. The formation of community banks is geared on supporting and nurturing the growth of rural and small-scale businesses as a first step toward the expedited economic development of the town that will eventually house these banks.

The maximization of profits should always and must be the primary focus of any and all banking institutions. Consequently, the maximizing of profits acts as the drive for the construction of a bank that requires an extremely high volume of business in order to accomplish and maintain its objectives. Two points should be taken away from the comment that was said before.

1.The amount to which savings are loaned out in the form of loans for the construction of capital assets, which in turn leads to economic growth and development, is a critical factor in determining the degree to which a rural community will experience economic growth and development.

2.The financial health of the community in which a community bank is located has a direct bearing on the profitability of the bank. The goal of the community bank is to make a profit from the interest that it accrues on the loans it makes out; however, this goal may not be reached if the people who live in rural areas are unwilling to use the community banks because they believe the banks do not benefit them in any way from their business activities.

Based on what has been discussed up to this point, the primary objective of this research is to evaluate the impact of community banks to the growth of rural areas within the state of Anambra via an examination of four distinct institutions.

In addition, the goal of this study is to collect first-hand information from members of the general public on what they know about the activities of community banks and how they feel about it. In addition to this, the research intends to draw attention to both the positive and negative aspects connected with community banking in the state.

1.3 Objectives Of The Study

The main thing which this study wants to unravel is the contribution of community banks in the development of rural area of Anambra state.

Sequel to this major purpose, the study would find out if:

1. The extent to which community banks really discharge their duties.
2. Community banks inculcate banking habits to the rural dwellers, thereby bridging the credit gap of the communities.
3. The establishment of community banks in Anambra State has assisted in the mobilization of rural savings.
4. The availability of the loans have reduced the rate of rural to urban migration.
5. Community banks have contributed towards the provision of basic infrastructures in their host communities.
6. Community banks have contributed to employment generation in their host communities.

1.4 Research Questions

The study will be guided by the following questions;

1. What is the extent to which community banks really have discharged their duties?
2. Does community banks inculcate banking habits to the rural dwellers, thereby bridging the credit gap of the communities?
3. Has the establishment of community banks in Anambra State assisted in the mobilization of rural savings?
4. Have the availability of loans reduced the rate of rural to urban migration?
5. Has community banks contributed towards the provision of basic infrastructures in their host communities?
6. Has community banks contributed to employment generation in their host communities?

1.5 Research Hypotheses

H01: Community banks have not contributed to employment generation in their host communities.

H02: Community banks has no significant impact in the development of rural areas.

1.4 Significance Of The Study

The study is conducted for the purpose of learning. It is therefore a pure research work based mostly on the information supplied by the employees and the genuine customers of the community banks within Anambra State. It is hoped therefore that this piece of research work will serve as a basis for other subsequent researchers in similar and related field of study.

1.7 Scope Of The Study

The scope of this study is based on the assessment of the the contribution of community banks in the development of rural area of Anambra state using four different banks as a case study. The study will comprise of customers of the four selected community banks in Anambra State. The selected banks include; Obodoukwu Community Bank Nig Ltd, Oraifite Community Bank, Nkpologwu Community Bank, and NIMO community bank limited.

1.8 Limitation Of The Study

In view of the prevalent high cost of living generally experienced presently, this research work is limited by financial constraints with regards to the high cost of transportation for the collection of both the primary and secondary data needed.

1.9 Definition Of Terms

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

1.10 Organisations of the Study

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms.

The chapter two covers the  review of literature with emphasis on conceptual framework, theoretical framework,  and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study,  sample size determination,  sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.

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