THE BANKING SYSTEM
On financial intermediation by banks and economic growth, there might be some confusion with the terms used in existing research on financial intermediation and growth. The different terms like financial intermediation, finance, financial development, financial system, financial markets and so on, have been used by different authors. However, in almost all papers same indicators are used and all refer to financial intermediation by banks. There are four vital components of a financial system. These include; financial institutions, financial markets, the regulatory authorities and financial instruments. The system in Nigeria has undergone remarkable changes in terms of ownership structure, the depth and breadth of instruments employed, the number of institutions established, the economic environment and the regulatory framework within which the system operates currently. The Nigerian financial system include banks, capital markets, insurance, pension asset managers and other financial institutions with the Central Bank as the apex institution. The banking industry in Nigeria is dominated by the commercial banks. The commercial banks dominate in both size and profitability In Nigeria, the financial system is the hub of productive activity, as it performs the vital roles of financial intermediation and effecting good payments system, as well as assisting in monetary policy implementation. The process of financial intermediation involves the mobilization and allocation of financial resources, through the financial (money and capital) markets by financial institutions (banks and non-banks) and by the use of financial instruments (savings, securities and loans). The efficiency and effectiveness of financial intermediation in any economy depend critically on the level of development of the country’s financial system. In effect, the underdeveloped nature of the financial system in most developing countries accounts largely for the relative inefficiency of financial intermediation in those economies. In these countries the financial system is dominated by banks, which are typically oligopolistic in structure and tend to concentrate on short-term lending as against investments with long-term gestation period. The alternative/complementary source for financing development projects is the development of debt or equity markets which at best, is at the rudimentary stage of development.
THE IMPORTANCE OF BANK LOCATION
An increase in the potential sale becomes possible with a good location, as it could attract more customers. The location theory, which considers an ideal location of a store in order to maximize the profit, was introduced in the early 20th century. The study of this theory became revitalized in the 1940’s as the assessment of broad characteristics of a store’s commercial zone and the measurement of market share within a city became the focus of the study. These studies experienced further rapid developments in the 1950’s. Especially, many theories regarding the characteristics of customers’ selections of retail stores were developed through the studies of the suburb shopping centers erected in the United States after World War II due to the decentralization of retail business. Based on these studies, the followings as the important factors in deciding the feasibility of a location: population, income, branch function, competition, land value, and future development potential, etc. The traffic hours and the type of traded goods as the contributing factors. This is also applicable to the banking industry; the location of the bank can affect customer banking intentions; banks that are in a very nice location tend to have more visitors in the areas of ATM transaction, cash deposit, and also opening of new accounts.
Banking habits can be analysed on the basis of frequency of bank visits, account maintenance in terms number of transactions, type of account, facilities availed in terms of ATM, credit/loan taken, money transfers, making deposits, savings, etc. Still there is a remarkable need of tapping the financially excluded population more specifically in rural areas and poor people residing in urban areas. The reasons of financial exclusion can be many such as: Lack of sufficient identity documents, less education, unawareness, unfamiliarity with the products and services, bank distance or bank timings, etc Analysing all the problems and challenges faced by a household will give insights in terms of improving banking habits of the people and motivate them to avail formal financial services rather than getting trapped in to informal financial sector.
BANK LOCATION AND BANKING HABITS AMONG UNDERGRADUATES
Previously it was believed that high level of illiteracy especially in the rural areas in Nigeria was the major factor affecting banking habits. But when it comes to undergraduate students, of course the issue of illiteracy is no longer a factor; however there are still some other factors that can influence banking habits among undergraduate students one of them is the bank location especially for students in schools or universities in rural areas. The students may prefer to keep their money at home than take it to the bank.
In conclusion, bank location affects undergraduate students banking habits. Student feel reluctant going to banks that are far from them to deposit money. Every student might need money urgently at any point in time to satisfy a particular need. The nearnest of bank to the students will help them get access to the money they need for anything.