Management of Loans and Advances in Nigerian Commercial Banks.
Abstract
This made efforts to assess the management of Loans and Advances in Nigeria Commercial banks. The research was prompted by the growing rate of bank loans and advance default cases that result to collapse or disaster and se4rious situation led to distress of many banks institution in our country.
However, the objectives set of this study includes; to ascertain the best conditions that will be appropriate to manage and checkmate the granting of loans and advances in the Nigeria commercial banks, to determine the causes of repayment failure and defaults of loans and advances, to investigate the factors that influence high degree of bad debt and doubtful debts etc.
The researcher equally formulated hypotheses in line to the objectives and research question. The primary data was collected using questionnaire that was distributed to the four banks of the study at the end 180 questionnaires was returned.
The data was presented using percentage frequency and the hypotheses were tested using the z-test statistical tool.
Then the study discovered the following, – that honesty of the credit applicant, provision of adequate collateral security, economic condition prevailing in the country, banking regulatory guideline of transparency and accountability,
Strength of the applicant business and the viability of the project are the pre-requisite factors banks considered before granting loans and advances, that the major causes of failure and default of loans and advance repayment include, fund diversion, risk/ unstable environment,
Fluctuation of exchange rate and inflation, poor evaluation and inadequate managerial skills, poor supervision and monitoring, poor sighting and hasty investment, illiquidity of financial instrument and high interest rate, and that the factors that influenced high degree of bad debt and doubtful debts in the bank includes,
Poor record-keeping and transaction, over-the counter (OTC) trading and excessive insider abuse, poor transparency and honesty excess load non-recovery, favouritism and incompetence & poor management etc.
Table Of Contents
Title page………………………. i
Approval page………………….. ii
Certification…………………… iii
Dedication………………………. iv
Acknowledgements…………………. v
Abstract………………………. vi
Table of content…………………… vii
CHAPTER ONE
- Introduction……………………. 1
- Background of the Study……………. 1
- Statement of the problem……………. 3
- Objective of the Study,………………….. 4
- Research hypothesis…………………… 6
- Significance of the Study……………….. 7
- Scope of the Study………………………. 8
- Limitation of the Study…………………. 9
CHAPTER TWO
- Review of Related Literature……….. 11
- The Introduction………………… 11
- The basic commercial Bank’s Lending and Advances principles…15
- Objective and policies of Lending………………… 17
- The sources of Commercial Banks Funds………. 20
- Lending principles and practices in Commercial Banks….. 23
- Classification of Bank Loans………….. 26
References………………………… 30
CHAPTER THREE
- Research Design and Methodology………………. 31
- Introduction………………………………… 31
- Research Method used…………………………. 31
- Sources of Data…………………….. 31
- Population of the Study…………………. 33
- Method of Data Analysis………………. 33
References…………………. 35
CHAPTER FOUR
- Data Presentation and Analysis………….. 36
- Introduction……………………………. 36
- Data presentation Analysis……………… 37
- Hypotheses Testing…………………… 45
CHAPTER FIVE
- Summary of Findings, Conclusion and Recommendations…. 55
- Summary of Findings……………. 55
- Conclusion……………………………57
- Recommendations…………………58
Bibliography……………….59
Appendix……………. 61
Introduction
Background Of Study
Commercial banks are “retail banking institutions” that accept deposits and make short-term, medium-term, and long-term credits available to government, public/private business enterprises, and individuals.
Some of their functions include accepting deposit through current and savings accounts;
fixed deposit and others, granting of loans and advances, equipment leasing, loan syndication; financing advisory services; trade and export finance; other investments and foreign remittances.
The relationship between Commercial bank and others financial institutions in terms of functions, limits, and modus operandi are spelt out in the Bank and other financial institutions Decree 25 Banking and other financial matters decree (BOFID)of 1991.
The Banking and other financial matters decree (BOFID) Decree 25 of 1991 in particular permits some other financial institutions like Merchant Bank, Development Bank and Insurance companies to engage in granting loans through mostly medium and long- term in nature.
This research work is mainly done on the management of loans and advance (short, medium-term, and long-term) granted by the Commercial bank in Nigeria.
Granting of loans and advances is an integral part of the functions of the Commercial Bank but one of the most risky one.
Bibliography
Adekanye, F. (1986): The Elements of Bank in Nigeria: Bedfordshire: Graham Burn.
Emekekwue, P. (1994): Commercial Banking: Kinshasa Zaire BASE/OAU. Federal Government of Nigeria, Bank and Other Financial Institution Decree 25 of 1991.
Federal Government of Nigeria, Companies and Allied Matters Decree 1 of 1990.
Garcia, G. G. (1997) Protecting Banks Deposits, Economic Issues No.9, IMF Washington.
Harper, W.X and Westfall R, (1964): Marketing Research Text and Cases, Illinois: Richard D. Irwin Inc).