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Impact Of Banking Recapitalization On Real Estate Sector
[A CASE STUDY OF OSOGBO, THE CAPITAL OF OSUN STATE]
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1.3 AIM AND OBJECTIVES OF THE STUDY
The aim of this study is to evaluate the impact of bank recapitalization in real estate sector of the economy.
OBJECTIVES
- To examine the real estate market prior to the process of recapitalization.
- To assess the recapitalization of the affected banks in the study area
- To examine the impact of recapitalization on the real estate sector
- To identify the problems of the recapitalization on the real estate sector and to suggest possible solutions.
1.4 JUSTIFICATION OF THE STUDY
Property (real estate investment in any given country involves large sum of money or capital commitment and also takes a long time to complete when compared to other forms of investment. The general economic condition of country is one of the major determinants of the level rate of real estate investment. The issue of incurring base now becomes a necessity in the development of real estate. The capital could be gotten from equity finance that is, from one’s saving, profit drawn on other business that are capable of carrying out development, including ways in which income would be earned without incurring debt. The other sources of development finance is gotten from debt finance, which ensures a liability on the developer to a second party that could be termed the financial on investors. As compared with equity finance where the developer is the investor to the land finance e.g from friends, banks, financial, institution, trust and bonds, property companies, government, pension funds and insurance etc of al sources of debt financing in Nigeria, bank and other financial institutions seem to be the largest dominating factor on real estate financing.
The property and development, gazette (1991) recognizes that without a well-organized and efficient housing finance system. It is difficult to mobilize substantial financial resources for channeling funds in to the real estate sector.
In the light of this, various works have been concerned with the problem of banking industry in Nigeria economy from a broad view Oboh G.A.F (1991), carried out a research work on banking and Nigeria economy. Contemporary issues in the Nigeria banking system. However, during the time they were carrying out the research, the banking sector, which was the major source of finance reneged on its role of financing sustainable economic development by rather supporting the import dependence nature of the economy.
Most of the revenues generated by banks before the recapitalization program was import business related. This was largely due to the highly fragmented nature and the weak capital base of Nigerian commercial banks as at that time.
Therefore, this study seeks to establish link between the reforms initiated by the central banks of Nigeria (CBN) and the accessibility of real investor to finance in order to ensure better performance and this, reduce the problem of real estate to the barest minimum.
1.5 SCOPE OF THE STUDY
This project work sought to establish the impact of recapitalization programe on real estate sector in Nigeria. However, as a result of time constraint, the writer limited the scope of this study to Osogbo.
Ideally, the study was supposed to embrace all the banks that were recipients of the recapitalization exercise and that are situated in Osogbo as well as the estate firms involves in the real estate practices, but the writer decided to focus on a random selection of the estate firms registered under estate surveyors and valuers registration Board of Nigeria (ESVARBON) and some banks that survived the recapitalization exercise.
1.6 LIMITATION OF THE STUDY
In the course of carrying out the research work, the following were the challenges encountered by the researcher.
There was the challenge of time constraints in which case, there was limited time to carrying out this research work, in the same vein, there was also the constraint of funds to carry out a very thorugh research work. There was also the challenge of retrieving all the questionnaires administered to these respondents and nonchalant attitude from the respondents.
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