Loan and Credit Administration: Problems and Prospect in Deposit Money Bank in Nigeria
CHAPTER ONE
Objectives of the Study
The objectives of the study are;
- To ascertain the problems and prospects of loan and credit administration in first bank
- To ascertain the challenges of inaccessibility to loans and credit in first bank
- To ascertain the important of bank credit as source of providing finances to investors
CHAPTER TWO
LITERATURE REVIEW
COMMERCIAL BANKING IN NIGERIA
“The structure of Commercial Banking in Nigeria is tailored towards that prevailing in the UK according to Femi Adescanye (1984). In other words commercial banking in Nigeria can be said to have taken the form of the branch banking system which is dominated by a few large banks with a wide network of branches spread through out the country. As at 1989 there were about twenty seven commercial banks in the country, but today the number is three times the later with over 2000 branches. The first three commercial banks to be established in Nigeria were of British origin. They were First Bank of Nigeria (PLC) formally known as standard Bank. It came under the name. British Bank of West Africa in 1894. The second is the present Union Bank former Barlays Bank established in 1917. The third being UBA (PLC) which was a British and French Bank established in 1949.
CHARACTER AND TYPES OF LOANS
Credit is generally granted by commercial banks based on confidence in a customers ability to repay the amount granted plus the agreed fixed interest. Such confidences are built on the lender’s satisfaction of the five “Cs” namely character, capability, capacity, capital or collateral. The existence of credit involves a lender and a borrower. Commercial banks are therefore called upon to extend credit to borrowers who may wish to obtain cash to make purchases. The credit or lending policies of a bank are in effect its screeching and appraisal devices by which it tries to determine the type and character of the loan it should grant, from a strict policy view point the character of a loan should take precedence over its form Grosse (1963). In other words it is a better appraisal method that a loan be sound and healthy than that they just be in form of mortgage or business loans or customer credit. For instance a bank in a rapidly growing residential area such as the newly created state capital or local government capital like Nasarawa State should have a higher ratio of long term loan to total loan than a bank in a stable industrial area like Lagos, Kano or Onitsha. The later also ought to have a higher ratio of commercial loans and perhaps a consumer credit. Grosse (1963) opined that as a matter of policy it is desirable for a bank to establish ceilings on the various forms of lending but the should do so solely for the purpose of distributing bank credit in proportion to the community’s need.
Commercial bank loans have been classified into various forms based on the purpose of the loan. These classes are.
- Loans to Business (i.e Commercial and Industrial Enterprises)
- Loans to Agriculture for current purposes
- Loans on purchasing and carrying securities
- Loans on real estate mortgage
- Customer loans
- Other loans not falling into the above categories.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to Loan and credit administration: problems and prospect in deposit money bank in Nigeria.
Sources of data collection
Data were collected from two main sources namely:
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was on Loan and credit administration: problems and prospect in deposit money bank in Nigeria. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenge Loan and credit administration: problems and prospect in deposit money bank in Nigeria
Summary
This study was on Loan and credit administration: problems and prospect in deposit money bank in Nigeria. Three objectives were raised which included: To ascertain the problems and prospects of loan and credit administration in first bank, to ascertain the challenges of inaccessibility to loans and credit in first bank and to ascertain the important of bank credit as source of providing finances to investors. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staffs of first bank. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made accountants, HR, marketers and junior staffs were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
Regardless of these implications, commercial banks in Nigeria are still swimming in enormous amount of Bad and doubtful debts. However, these trends notwithstanding, if the above recommendations can be carefully and patiently implemented effectively and efficiently, they will help to not only reduce the incidence of doubtful debts but also help in recovering those debts that have become unrecoverable over the years. And there will be no need for the Federal Government prudential guidelines on this issue.
Recommendation
Bank regulators; to provide them with information to enforce banks to have an effective system to identify, measure and control credit risk as part of an overall approach to risk management. Also, policy on insider/related parties’ credit should be enforced to prevent credit losses. Operators of banks; to help them pay attention to improve financial stability by managing credit risk that deposit money banks are facing. Investors; to have a more hoslistic information on how the return on their investment will be affected by poor credit arising from non-performing loans.
References
- Adegbie, F. F., & Dada, O. T. (2018). Risk Assets Management, Liquidity Management and Sustainable Performance in Nigeria Deposit Money Banks. International Journal of Accounting Research, 6(2), 1-10. doi:10.4172/2472-114X.1000178
- Adeusi, S. O., Akeke, N. I., Adebisi, O. S., & Oladunjoye, O. (2014). Risk Management and Financial Performance of Banks in Nigeria. IOSR Journal of Business and Management, 14(06), 52-56.
- Afriyie, H., & Akotey, J. (2011). Credit Risk Management and Profitability of Selected Rural Banks in Ghana. Journal of Finance, 1(1), 1-18.
- Ahmad, N. H., & Ariff, M. (2007). Multi-Country Study of Bank Credit Risk Determinants. International Journal of Banking and Finance, 5(1), 135-152.
- Ajekigbe, J. M. (2009). The Nigerian Banking Industry: Challenges and Prospects. Tax Valedictory Lectures Organised by the Charterted Institute of Bankers of Nigeria.
- Muson, Onikan, Lagos. Ali, J. I., Jatau, S., & Ashami, P. I. (2016). Deposit Money Banks` Credit and Investment Drive of Developing Economies: Emprical Evidence from Nigeria. Asian Journal of Agricultural Extension, Economics and Sociology, 11(1), 1-12.
- Ali, S. A. (2015). The Effect of Credit Risk Management on Financial Management on Financial Performance of the Jordanian Commercial Banks. Investment Management and Financial Innovation, 1(2), 1-2.
- Ali, S. A. (2015). The Effect of Credit Risk Management on Financial Performance of the Jordanian Commercial Banks. Investment Management and Financial Innovations, 1(12), 1-2.
- Amahalu, N. N., Obi, J. C., Chidoziem, E. B., & Abiahu, M.-F. (2017). Loan Management and Financial Performance of Quoted Deposit Money Banks in Nigeria. International Conference on Africa Entrepreneurship and Innovation for Sustainability Development, 1(1), 21-40.
- Amidu, M. (2007). Determinants of Capital Structure of Banks in Ghana: An Empirical Approach. Baltic Journal of Management, 2(1), 67-69.
- Anderson, Salas, V., & Saurina, J. (2002). Credit Risk in Two Institutional Regimes: Spanish Commercial and Savings Bank. Journal of Financial Services Research, 22(3), 203-224.
- Appiah, K. O. (2011). Corporate Failure Prediction: some Empirical Evidence from Listed Firms in Ghana. Journal of Business, 10(1), 32-41.
- Asset Management Corporation of Nigeria. (2013). Management presentation. Retrieved 2018, from
- ADEKANYE FEMI (1984): The Nigerian Banking Herad Book; A factual introduction to the Banking and economic environment (Longman).
- BLACK J.A. and CHAMPION D.J. (1976): Methods and Issues in Social Research (New York John Willey).
- CANDILIS O. WRAY (1975): The Future of Commercial Banking (New York, Praeger)
