UNIVERSAL BANKING AND THE NIGERIAN ECONOMY
ABSTRACT
    In this study, the effect of universal banking adoption on the Nigerian economy was examined. The empirical analysis began with determining the effects of universal banking on bank performance and then using the inference to justify the effect of universal banking on economic growth in Nigeria.
    Using the Ordinary Least Squares econometric methodology, the basic findings reveal that compliance to universal banking has a pervasive impact on the capital adequacy ratio of Nigerian deposit money banks; universal banking compliance has no significant impact on the liquidity ratio of Nigerian deposit money banks over the period of the study. The capital adequacy and bank liquidity (as universal banking variables) do not have significant effect on the economy. Thus, universal banking should not have these factors as the main focus for the banking sector if universal banking will promote economic performance in Nigeria. On the other hand, bank profitability is the only universal banking indicator that has significant impact on the economy. In the result, the profitability variable exerted significant positive effect on real GDP, suggesting that profitability is the only channel through which universal banking can affect improve income growth. Thus, universal banking did not have a significant overall effect on the economic performance in Nigeria. The empirical results from the estimated model showed that the coefficient of the universal banking dummy failed the significance test even at the 10 percent level.
    The study recommends among others that Shareholders of Nigerian deposit money banks should ensure that their boards of directors comply less with the practice of universal banking in order to boost the capital adequacy ratio of Nigerian money deposit banks.
TABLE OF CONTENT
CHAPTER ONE: INTRODUCTION
1.1    Background of the Study                
1.2    Statement of Research Problem            
1.3    Objective of the Study                    
1.4    Research Hypothesis                
1.5    Significant of the Study                    
1.6    Scope of the Study                        
1.7    Limitation of the Study                
CHAPTER TWO: LITERATURE REVIEW
2.1    Introduction                        
2.2    Brief History of Universal Banking and the
Nigerian Economy                    
2.3    Universal Banks in Pre-Word War Belgium            
2.4    Guidelines for the Particle and Universal Banking
in Nigeria                             
2.5    Activities that Banks can Undertake         
2.6    Relevant Guidelines                 
2.7    Bank’s Embarking and Underwriting/Issuing
House activities Under Universal Banking Practice
in Nigeria are Expected to comply with the following    
2.8    Underwriting/Issuing House activities     
2.9    Insurance activities                     
2.10    Supervisory Framework under Universal Banking    
2.11     Empirical Evidence                 
CHAPTER THREE: METHODOLOGY
3.1        Model specification                     
3.2    Data Issue                            
CHAPTER FOUR: EMPIRICAL ANALYSIS
4.0     Introduction                        
4.1     Universal Banking and Banking indicators             
4.2     Analysis of Estimated model                
CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1     Summary of Findings                    
5.2     Recommendations                        
5.3     Conclusion                            
    Bibliography                        
    Appendix                             
CHAPTER ONE
INTRODUCTION
1.1    BACKGROUND OF THE STUDY
The concept of universal banking is most relevant in the United Kingdom and the United State, where historically there was a distinction drawn between pure investment banks and commercial banks. In the US, this was a result of glass-steagall act of 1933. In both countries, however, the regulatory barrier to the combination of investment bank and commercial banks as largely been removed, and a number of universal bank have emerged in both jurisdiction. However, at least at the global financial crisis of 2008 there remain a number of large, pure investment banks. Universal banking is a combination of commercial banking, investment banking, development banking, insurance and other financial activities. It is a place where all financial product are available under one roof. So, a  universal bank is a bank which offers commercial bank functions plus other function such as merchant banking, mutual funds, housing finance factoring, credit cards, retail loans, insurance etc, universal bank is done by very large banks. These banks provide a lot of finance to many companies so, they take part in the cooperate governance (management) of the companies this banks have a large net work of branches all over the country and over the world. They provide many different financial service  to there clients.
Universal banks are financial institutions that offers an entire range of financial services. They commonly have ht e ability to mobilize large amount of capital, and act as long-term investors, supporting companies in different ways.
In India two reports in 1998 mentioned the concept of universal banking they are, t he naraimham committee report and the S.H. Khan committee report. Both the Report advise to consolidate (bring together banking industry through merges and integration of financial activities. Universal banking is emerging as available business model banks in India which ensure functional diversification and generates efficient and productivities gains. The phenomenon of universal banking in India takes place through diversification of income source especially non interest income, exposure off-balance sheet activities, and exploiting the bancassirrance and securities market opportunities market opportunities.
India banking sector has witnessed drastic changes in recent years as a result of world wide more towards deregulation, globalization of finance and technological innovations. It has lead to dismantling of traditional classification of financial entities in to banking and non-banking segment. Universal banking assumed policy importance in India in 2001 after the release of reserve bank of India discussion both on universal banking p8 and recommendation of the khan committee report on functioning of dfis in 1998.
1.2    STATEMENT OF THE RESEARCH PROBLEM
    krosznal and Rajan (1994) study on universal banking in the united state before 1933 revealed that bank affiliate (security affiliate) under write high quality issues and the affiliate underwritten securities performed better than the issue underwritten by independent investment banks. They observe that lower-rated and more information intensive issue are performing well in the markets in comparison to other issue. Ber et al (2001) observed that the combination of bank leading underwriting and investment fund management is more likely to result in conflict to interest. Adalet (2002) made an empirical study on vulnerability of universal bank to failure based on the data available for 1931 and came up with the conclusion that ‘illiquidity’ increase the probability of failure and universal banking decreased financial stability during great depression in 1930. Thus, in view of the fact that universal banking has become in wining concept all over the world, arguments still abound by many researchers in the efficacy of universal banking system to effectively curb corruption and sharp practices within the banking sector and ultimately assure economic growth and development of a nation. Hence, this study specifically seeks to provide answers to the following research questions;
1.    What is the relationship between universal banking and economic growth in Nigeria?
2.    What is the impact of capital adequacy ratio on the growth of the Nigerian economy?
3.    Is there any relationship between liquidity ratio and the Nigerian economy?
4.    Does Bank profitability have any effect on the Nigerian economy.
1.3    OBJECTIVES OF THE STUDY
    The objectives of the study are to;
1.    Determine the impact of universal banking on the Nigerian economy.
2.    Determine to relationship between capital adequacy ratio and economic growth.
3.    Determine the effect of liquidity ratio on the Nigerian economy.
4.    Examine the relationship between Bank profitability and economic growth in Nigeria.
1.4    STATEMENT OF HYPOTHESES
The following are the Hypotheses of the study;
1.    There is no positive relationship between universal banking and economic growth in Nigeria.
2.    Capital adequacy ratio has no impact on the Nigerian economy.
3.    There is no relationship between liquidity ratio and the growth of the Nigerian economy.
4.    Bank profitability does not affect the growth of the Nigerian economy.
1.5    SIGNIFICANT OF THE STUDY
    The importance of universal banking and relationship banking often coexist but can exist independently. The provision of many service render by universal banks can lead to long-term relationship between universal bank and firms.
    A universal bank participates in many kind of banking activities and is both a commercial bank and an investment bank. These are also called full-service financial firms although there can also be full-service investment banks which provide asset management trading and underwriting.
    This study is important to client because it provide “one-stop shopping” for clients in need of a verity of financial services. In modern economies, the financial needs of both households and certainly firms are diverse as they try to find financial solutions to a broad spectrum of problems such as payment ,methods, funding, serving for a variety of purpose (old age), educations, real estate, consumption.
    This study is also important for students in the field of economic and banking in the future research.
1.6    SCOPE OF THE STUDY
    It is a Nigerian specific study covering a period of twelve years (2001 – 2002). The reason for the choice of this period is that universal banking officially stated in Nigeria on January 1st 2001. Hence it’s analysis would be centered on the period of it’s inception to 2012.
1.7    LIMITATION OF THE STUDY
    Limitation of this study research work is the time required in going round for collecting of data and other relevant information for the study, and also analyzing such for the purpose of this research. Non-availability of some important data might affect the outcomes of the research work. This problem arises due to unnecessary bureaucracy in institutions charges with handling of such data.
    There is also storages in revenue required to facilitate the successful execution of the work.