Literature Review of Commercial Banks in Nigeria

The research conducted by Terungwa (2011) focus on the risk management issues that were present in the banking sector. As concerned that there are banks that are making more money or more; as they imposed charges or fees on the customer. Banks are willing to impose these charges on the people or customers as they want to grow towards national economic growth. Moreover, for general business development; there is the bank’s motivation in order to focus on risk management. The banks are taking these initiatives in order to manage the financial performance in Nigeria so there could be a significant relationship between the bank's performance and risk management (Terungwa, 2011).

The research conducted by Zhao & Murinde (2011) focuses on the investigation of the interrelationships that are between the banks. However, as the Nigerian banks are imposing the tax and other charges on the consumers; in this way, the research focused that risk-taking or such attitude of the banks help the banks to focus on the competition. Strategies are flavorful for the risk-taking and efficiency of the country. Moreover, the banking sector improvements or reform in Nigeria of the current research analyzes that bank productive efficiency can be increased through deregulation as well as the re‐regulation influence. The bank of Nigeria is more risk-taking via competition (Zhao & Murinde, 2011).

It is analyzed in the studies that banks are willing to impose these charges on the people or customers because of the concerns related to national economic growth; the level of bank loans and bank deposits is not completely controlled properly by banking staff because excess reserve can be held by the banks and the currency holdings can be changed by the public. The change in any of the factors has the ability to change the process of deposit expansion. The increase in excess reserve or currency has the ability to lower the number by which loans and deposits are increased. Role banks are ignored by the simple model and creation process is being played by their customers. The customers of the bank are able to decide to hold the currency or not and the bank is able to decide to hold the excess reserve or not. Both banks and customers will restrict the ability of the banking system to create loans and deposits. Hence, the simple deposit multiplier's prediction is more than the true multiplier. (Allafrica.com, 2018)

The increase in the market rate of interest lowers the excess reserves of the banks because increase lending will be profitable for the banks. On the other hand, the excess reserve will be increased by the increase in outflow of expected deposit. The excess reserves can be decreased due to the increase in the rate of interest, increasing the money supply as well as a multiplier. Excess reserves can be increased by the increase in expected outflows, reducing the money supply and multiplier. In the ATMs' increasing availability, it was found by the banks that more cash is needed to be supplied to the banks increased the ATMs all over the world. Thus, the mean of this increased vault cash is that more excess reserves are being held by the banks. The behavior of banks will not be altered by the change in reserve requirement, as long as extra vault cash that the bank is holding is more than the change in reserve requirements. (Kehinde, 2015).

The research conducted by Zhao & Murinde (2011) noticed that in the period 1993–2008; there was the three-stage procedure through systematic investigation in which there was reform experience in the Nigerian commercial banking sector. However, it was noticed that empirical results were improved and there was productive efficiency in the country. Moreover, such strategies of imposing charges on the people can increase in bank competition and could result in the well-functioning banking sector so that efficiency can be productive and there could be financial stability (Zhao & Murinde, 2011).

According to the research study conducted by Whittaker in 2011the bank charges related proceedings were brought by the OFT based on agreement drawn between building societies and 8 banks. In the legislation, four charges are considered as fair charges regarding the withdrawal and deposit transaction made by the customers. OFT analyzed to ensure fairness in the bank charges meeting with the 1999 regulations. (Whittaker, 2011) OFT is also required to take into consideration the adequacy of remunerations or prices. research findings conclude that article 4(2) of 1993 directive decided this matter by providing power to the general court regarding the decision of fairness and bargaining of charges.
Research study held by Adeoye & Lawanson in 2012 presents that bank charges are the key problem that is influencing the customer satisfaction in every Nigerian bank even when all banks of Nigeria are highly concerned towards customer loyalty and satisfaction. (Adeoye & Lawanson, 2012) The research project that customers of commercial banks becomes dissatisfied with the bank services whenever a bank deduct charges of their services or whatever from the accounts of customers without informing them. Customers related to the field of trading and merchandizing require several branches of banks in different areas to enable them to make transactions through banks but high charges cause a problem for them.
Summarizing the research findings of Armstrong and Vickers (2012) it can be said that the UK court is focused on the issue of bank charges and legislation of charges. Banks in the UK deduct contingent charges for financial services. COntigent charges can be charges or dues for unauthorized overdrafts. In Uk banking system bank prevailing charging model is not quite functional and adequate as it is just a so-called “free if in credit” system. (Armstrong & Vickers, 2012) Customers are not required to pay fixed charges for their financial services somehow bank deducted charges whenever customer made the transaction with the support of the bank. Under legislation penalties for breach of contract are unenforceable. Damages caused by these problems are known as liquidated damages.
Ovat, 2012 (Ovat, 2012) researched the banking sector of Nigeria to present the challenges and benefits of cashless policy of Nigeria. Research projects that charges applied to the customer in the banks of Nigeria are N100 per every 1000. Even the charges are high but still, it does not prevent the customers from withdrawing cash and depositing cash amounts in the banks. In Nigeria, the government has legalized cash management charges. Particularly on public holidays banks deduct extra cash management charges as they provide high security on these days to their customers.
Research Question of Commercial Banks in Nigeria

The research questions are discussed as follows:

1.      How imposing judicial conceptions of charges by commercial banks in Nigeria to their customers can help the Nigerian financial services sector to grow?

2.      What kind of charges does commercial banks require in Nigeria?

3.      What customer protection turf are introduced by the court?

4.      How fairness of charges are judged in Nigeria by the court?

5.      Does a  Nigerian customer pays charges as much as a UK customer pays?

6.      What kind of measures a bank take to safeguard their customers from bankruptcy?

7.      How customers of Nigeria can be satisfied through imposing high fixed costs or charges by commercial banks?

8.      Does the Nigerian economy through more efficient allocation of resources can result in revenue enhancement and overall market power?

9.      Does an efficient organizational structure or better organizational focus can result in risk reduction for the banks?

10.  How the advent of deregulation can bring returns on investment and how profit margins can be improved?

References of Commercial Banks in Nigeria

Allafrica.com. (2018, November 15). Nigeria: The Senate and Excess ATM Charges. Retrieved from https://allafrica.com/stories/201811150740.html

CENTRAL BANK OF NIGERIA. (2017). THE GUIDE TO CHARGES BY BANKS AND OTHER FINANCIAL INSTITUTIONS IN NIGERIA.

DAMILOLA, B. (2018). How Banks Exploit CBN's Weakness To Impose Excessive Charges On ATM Users. Retrieved from http://saharareporters.com/2018/05/16/how-banks-exploit-cbns-weakness-impose-excessive-charges-atm-users

Kehinde, J. S. (2015). Banking Sector Technology Discrepancies: The Cost and Effect on Service Delivery. 17(17), 2017-222.

Terungwa, A. (2011). An empirical evaluation of small and medium enterprises equity investment scheme in Nigeria. Journal of Accounting and Taxation, 79-90.

Zhao, T., & Murinde, V. (2011). Bank Deregulation and Performance in Nigeria. African Development Review, 30–43.