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The purpose of study is to determine the roles of (NDIC) in minimizing Bankruptcy in the Nigeria deposit banks. The problem of the study was that there is consistent bank failure of the banking sector together with irregularities.  The objective is to find out why there are still bank failures in Nigeria. For the success completion of this research work, the researcher makes use of both primary and secondary methods of data collection for information gathering.  Primary data were collected through direct interaction with the staff of NDIC.  Secondary data were collected through periodical and journals, textbooks and lecture notes.  The gathered data was put with simple percentages while the hypotheses stated were tested with chi-square. The summary of findings made was that (NDIC) play a greater role to the banking industry and depositors.  The conclusion showed that government has made laws that will help to sanitized the banking sectors. Therefore the researcher, recommended that NDIC should protect the depositors interest as well as promoting safe banking environment in the country.













Title Page                                                              ii

Approval page                                                        iii

Dedication                                                             iv

Acknowledgement                                                   v

Abstract                                                                vi



  • Background of the study 1
  • Statement of the problem 3
  • Objectives of the study 4
  • Research Questions 5
  • Research Hypothesis 6
  • Significance of the study 7
  • Scope and limitation of the study 8
  • Definition of Operational Terms 10





  • An overview    13
  • Historical development of banking industry in Nigeria 14
  • History of NDIC in Nigeria    20
  • Achievement of Nigeria Deposit Insurance Corporation (NDIC)                                                        22
  • The Role of the Nigeria Deposit Insurance (NDIC) 26
  • Reasons behind the establishment of the Nigeria Deposit Insurance Corporation (NDIC) 28
  • The benefits of the Nigeria Deposit Insurance Corporation (NDIC) 32
  • How the banking industry pay their premium and to what extent                                                 35
  • Problems facing the NDIC 38
  • The impact of NDIC on the banking industry Insurance Corporation on the banking industry 42
  • Examination of Laws Guiding Nigeria Deposit Insurance Corporation on the banking Industry 44




3.0  Research Methodology                                      48

  • Research Design 48
  • Sources of Data 49
    • Primary Data 49
    • Secondary Data                            50
  • Population of the Study 51
  • Sample Size 52
  • Instrument Used 54
  • Method of Data Presentation 56
  • Validity and Reliability of the Instrument 56





  • An Overview 58
  • Data Presentation 58
  • Data Analysis 59
  • Test of Hypothesis 71




  • Summary of Finding 80
  • Conclusion 83
  • Recommendations 84
  • Suggestion for Further Studies 88










The introduction of banking system emerged in 1891 but centrally started in 1892, when the ACB Bank was managed by colonial master, there was a lot of disparity in employment and given out loan to Nigerians. The Nigerian citizen objected to that and formed their own bank which was ruined by poor management. Fraud, inadequate capital and other problems Adeniyi P.O (1998).

In 2006, the Nigerian government commenced the implementation of a structural adjustment programme (SAP), which entailed liberalization and deregulation of the Nigeria economy. As a result, the numbers of bank increased phenomenally from 48 in 1988 to 120 in 1990. the development triggered competition as well as increase in the risk to which bank depositors were exposed to, which now led to the introduction of a Deposit Insurance Scheme (DIS) in Nigeria? Through the enactment of Act 22 of 1988 which established the Nigeria Deposit Insurance Corporation (NDIC), the Agent vested with responsibility of implementing the system in the country. The NDIC commence operation in March 1989. The scheme was introduced to provide a further layer of protection to depositors and complement the Central Bank of Nigeria (CBN) supervisory activities in ensuring a safe and sound banking system. The DIS in Nigeria like most other explicit scheme, has specified maximum insured sum a clearly defined ex-grant, funding arrangement and a specified administrative structure participation in the scheme is compulsory for all licensed deposit taking financial institutions while the implementing agency is owned by government.  The implementing agency NDIC also has responsibilities for monitoring the health of the insured institution as well as the risk exposure of the deposit insurance fund (DIF) and providing an orderly indicated in the corporation enabling law. In effect the DIS in Nigeria is designed as a risk minimized, (Central Bank of Nigeria (1995) “Annual report and statistic, Lagos).



The problems that prompted the researcher on the topic, include the following;

  • Consistent failure: In spite of all the arrangement and effort of the NDIC toward the Nigerian banks are still experiencing failure. The NDIC had employed a lot of framework and mechanisms toward eliminating these failures and all to no avail. If this should persist, it will result to massive bank liquidation in Nigeria.
  • Irregularities: Irregularities in the Nigerian deposit bank has not been adequately stamped out, the NDIC had not been able to utilized stable procedures towards eliminating the bank distress in the Nigerian banks. So there should be uniformity in the mechanism used.
  • Lack of adequate Examinations: Lack of adequate examinations of the financial ratio analysis and of the strength of the Nigerian banks. The NDIC had failed to employ a more adequate measure of the financial capacity and the ability of the Nigerian banks.



The major objective of the study includes the following:

  • To examine why there are bank failure in the Nigeria Deposit bank, despites all the arrangement and the efforts of the NDIC.
  • To find out why the NDIC had not been employing stable and uniform measures in order to stamped out irregularities in the Nigerian banks.
  • To know what extent the NDIC had gone in order to adequately examine the financial ratio analysis and also the strength of the Nigerian banks.



The following research questions are formulated for the purpose of this research work;

  • Is there any form of failures after all the arrangement and efforts of the NDIC toward the Nigerian banks.
  • Why has NDIC been unable to stamped out irregularities in the Nigerian banks.
  • Is NDIC really examining the financial ratio analysis and the strength of the Nigerian banks.

The following are the research hypothesis which originated mainly because of the study.

(1)   Ho:  NDIC has not done anything to make sure that

Nigerian banks        do not fail

H1: NDIC has done their best to make sure that

Nigerian deposit banks do not fail.

(2)   Ho:  NDIC has not created any impact in order to

stamped out irregularities in the Nigerian depositing banks.

H1:    NDIC has created a great impact in order to

stamped-out irregularities in the Nigeria deposit


(3)   Ho:  NDIC is not examining the financial ratio analysis

and the strength of the Nigerian deposit banks.

H1:  NDIC is examining the financial ratio analysis and

the strength of the Nigerian deposit banks.


The research work will be immerse significance to the following;


The study will be useful for academic purposes and it will serves as a data base for students carrying out further research work on the related topic in future.


The study will be vital to the stakeholders in so many ways. It will enlighten them, on the impact of NDIC to the economy development, thereby encouraging investors, large turn-over and also review the needs for insurance protection.

Insurance Company;

The study will also be useful and vital to the Insurance industry in the sense that it would help them to implore in the service rendered to the banking sectors and to the economy at large.


The study also will serve as a source of revenue to the Nigerian economy. It will bring overall development in the Nigerian economy and also encourage foreign investors into the country.



The roles of NDIC in minimizing Bankruptcy in the Nigerian deposit banks. The scope of this research work is restricted to the NDIC. Therefore, the information gathered from NDIC will be used as a reference to other insurance companies in Nigeria.

The researcher encountered the following constraints in the research work’


  • Sourcing of Data: Due to the nature of insurance job it was quite difficult to get managers and other higher senior officers to answer the research questions and to give information as related to this research work.
  • Previous Research Work: Another factors that limited further research on this topic was death of previous research work on the related topic.
  • Bad behaviour of the respondents during the period of the research work.
  • Time: The researcher limitation to this study is the time factor needed to get the information for the research work has been a problem.
  • Money:   money is scarce for everybody let alone a student who is not working which also contributed to the impediment but something must be achieved at the end.
  • Lack of response: The respondents during personal interview could not co-operate were conscious of letting out company secrets.


  • NDIC: Nigerian Deposit Insurance Corporation
  • Service adequacy; They regulates banking and the insurance industries.
  • Distress; Suffering and problems caused by not having enough money.
  • Failure; lack of success or not successful in doing something.
  • SAP; Structural Adjustment Programme.
  • Regulation; The process of controlling
  • Legislation; The process of making and passing laws.
  • Depositors; there are “person” who deposit money in a bank while insured deposits are the depositors that have their deposits covered to the tune of N50,000 by the NDIC and are entitled to a maximum of the amount in case of liquidation, uninsured depositors are those depositors who have deposit in excess of N50,000
  • Liquidation; Dissolution of an insolvent firm (bank) through the sale of this assets and the distribution of proceeds base on priority of claims.
  • Resolution Option: The choice made by the authorities (CBN/NDIC) to resolve bank failure.













Adeniji, P.O (1998) “The other sides of distress in Banks (1)

Business times,       February 16.


Central Bank of Nigeria, (1995), “Annual report and statistic,





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