Role of Development Banks to Socio-economic Development of Rural Dwellers – Case Study of Agriculturists in Nigeria
1.0 Background
According to Crane et al (1995), the function of the financial system is primarily to facilitate the allocation and deployment of economic resources across borders and time in an uncertain environment. Further, there are six basic functions that the financial system performs. The first function is clearing and settling of payments to facilitate the exchange of goods, services and assets. The set of institutional arrangements for accomplishing such task is called the payment system. As such, the mechanisms for transactions are designed to deal with the costs and risks associated with the process. Poling resources and subdividing shares are the second function, purporting diversification. Notably, the minimum investment required to run a business is often beyond the means of an individual or the group of individual.
Further, financial systems provide opportunities for these individuals to participate in large indivisible investments. The third function is to transfer economic resources through time, across geographic regions and among industries. This is life cycle allocation of household consumption and allocation of physical capital for the productive use of the business sector. Management of uncertainty and controlling risks are the fourth function wherein risks are allocated through elaborate financial securities, through private sector and government intermediaries. Providing information and dealing with incentive problems are the fifth and sixth functions, respectively. The financial system provides price information to assist in coordinating decentralized decision-making in various sectors of the economy. As well, the financial system provides ways in dealing with the incentive problems when one party to a financial transaction has information that the other party does not, or when one party is an agent for another (pp. 12-16).
Banking services are introduced to the rural areas for the purpose of reducing income inequalities since the operation of the formal financial system could positively affect the economic opportunities for the poor. It has been reported by BBC (2005) that banking in the rural areas provides access to the people as this remains as an important aspect of the financial system. Rural banks interact closely to the communities where people reside and work, leading to speed of service, reduced transportation costs and. In this way, rural banks are not only for the rural sector but also an indispensable partner of the government to countryside development. However, there are very limited literatures on how the banking system implicates the rural population especially through the process of rural banking.
2.0 Problem Statement
The key issue that will be addressed in the study is does the establishment of development banks influence and contribute to the social and economic development of the dwellers and in particular in Nigeria. Banking is an indispensable element in the urban system hence the diverse, systematic cash points in cities. In the rural area, this may not be the case as there are alternative financial strategies that they employ such as through local financial associations. The following research questions will be given answer to:
1) How do the residents of rural areas perceive the importance of development banks in the development of the area itself as well as its dwellers?
2) In what specific ways rural development banking benefit the dwellers specifically the agriculturists?
3) How rural development banking affect the traditional financial practices of these agriculturists toward their development?
3.0 Study Objectives
The main aim of this strategy is to investigate the role of development banks to the Nigerian rural population. In lieu with this, these specific objectives will be addressed:
· Determine the perceived benefits/advantages of development bank on the dwellers in general
· Distinguish the effect/outcomes of rural development banking to the agriculturists
· Analyse the ways in which rural development banking improve/can improve the quality of lives of the dwellers economically and socially
4.0 Methodology
The research will use a multi-method approach to gather the pertinent data as it can yield to two major advantages. As Saunders et al (2003) puts it, on the one hand is that different methods can be used for different purposes in the study and on the other is that it enables triangulation to take place. The research will operate within the cross-sectional.
Another method that will be employed is the case study. According to Robson (2002), a case study is a “strategy for doing research which involves an empirical investigation of a particular contemporary phenomenon within its real life context using multiple sources of evidence.”
In this study, primary and secondary research will be both incorporated. The reason for this is to be able to provide adequate discussion for the readers that will help them understand more about the issue and the different variables that involve with it. The primary data for the study will be represented by the survey results that will be acquired from the respondents.
For my research, I have chosen the survey strategy because it can gather a large amount of data from a sizeable population in a highly economical way. The questionnaire will be data gathering instrument used for the survey and would be composed of two parts. The first part will contain information regarding the researcher and the purpose of the study; details about the respondents. The second part of the questionnaire is the survey proper.
On the other hand, the literature reviews to be presented in the second chapter of the study will represent the secondary data of the study. The secondary sources of data will come from published articles from books, journals, theses and related studies, newspaper and magazines.
5.0 Timeframe
TASK
Weeks
1st
2nd
3rd
4th
5th
6th
7th
8th
9th
10th
11th
12th
Read Literature
Finalize Objectives
Draft Literature Review
Devise Research Approach
Review Secondary Data
Organize Survey
Develop Survey Questions
Conduct Survey
Analyze Secondary and Primary Data
Evaluate Data
Draft Findings Chapter
Complete Remaining Chapters
Submit to Tutor and Await Feedback
Revise Draft and Format for Submission
Print, Bind
Submit
References
Crane, D B, Bodie, Z, Froot, K A, Mason, S P, Perold, A F and Merton, R C 1995, The Global Financial System: A Functional Perspective, Harvard Business Press, Boston, USA.
‘How to best bank in rural areas,’ BBC News, retrieved on 13 November 2009, from http://news.bbc.co.uk.
Credit:ivythesis.typepad.com
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