CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Since money is needed for our day to day transactions and businesses, banks have also become an integral part of lives. Banking which generally refers to any business or transaction (depositing, withdrawal, asking for loans etc) carried out with a bank has evolved over the years. With the introduction of computers, mobile phones and the internet, e-banking has been enhanced to make banking a lot easier and very interactive between users (Orji, 2003).
Many under-graduate students have bank accounts and they are conversant with the evolving technology associated with modern banking. As newer technologies are introduced everyday, so do students adjust their lifestyles, values and even their spending habits to suite these emerging developments and newer needs.
The introduction of the cashless policy in the Nigerian economy coupled with already existing internet and mobile phone banking has advanced our societies. Gone are the days when people cue up for longer hours just to carry out a transaction with the banks. Nowadays, with the introduction of more sophisticated devices and easy access to the internet, transactions that could only be carried out in the banking halls are done conveniently at homes, while those that took longer hours are done within minutes. This new era is good with no single doubt, but will easy access to funds promote saving and investment habits amongst university undergraduates?
1.2 STATEMENT OF THE PROBLEM
Easy access to cash has negatively influence banking habits of university students in Nigeria and in some cases leading to low academic achievement amongst undergraduates. The introduction of the internet banking, automated teller machines (ATM) and mobile banking in the banking sector of Nigeria has made it easy for students to easily spend without saving or investing. Poor banking habits are greatly linked with extravagant spending and poor financial planning. A study conducted by Gbenga (2005) on some polytechnic students revealed that students with ATM cards tend to exhibit huge spending habits than those with no ATM cards. A similar study conducted on college students in New York by Tricholla (2002) also revealed that students with credit cards exhibit negative banking habits leading to poor academic performance as they are always involved in issues relating to huge debts and extravagant spending.
Many undergraduate students have ATM cards. In fact, according to Robb and Pinto 2010, 84% of undergraduates have at least one ATM card. These students don’t just possess the ATM cards; they accumulate unhealthy amounts of debt from friends and practice irresponsible spending habits. With the introduction of online shopping, students spend a huge chunk of their money buying clothes online, shoes and other luxury items over the internet.
Poor Banking habits by students can lead to high crime rates or poor academic performance of students. Excessive spending by students can cause financial instability to students thereby pushing them to involve themselves in robbery in-order to maintain their status.