ABSTRACT
The economy of any
nation is usually boosted (or otherwise down troubled though the influence and
impact (positive and negative) of small and medium industries. This is usually
the grade industries that are seen every where in our urban and rural areas and
which cater for the immediate needs of the populace of any given nation.
Small and medium industries are seen to suffer untold hardship owing to the
regulatory polices of government. Most government policies and other external
environmental variable usually affect the small and medium industries and
further hamper the economic growth and development. But sometimes too, there
could be some favourable policies which could help to improve the status of the
small and medium industries. This research work therefore examines the
role of banks in developing small and medium enterprise within Lagos State.
Banks are privately owned banks established for the purpose of making profit
for their owners. Banks performs certain duties to the small and medium
enterprises to enable them carry their business effectively. Some of their
duties are accepting deposit, granting loan and overdraft facilities, agency
services standing order, investment advice etc. SMEowners are faced with many
problems which hinders their growth, some of which are poor record keeping,
insufficient fund, poor location, government policies lack of business
knowledge, poor quality goods and services etc. Literature review and some
references were made to relate the role of banks in developing SMEin the
chapter two of the work. Finally the researcher after everything summarized the
findings from the data gotten and resolved into making reasonable
recommendations before concluding at last.
TABLE OF CONTENTS
Title
Page
Approval Page
Dedication
Acknowledgement
Abstract
Table of Contents
Chapter One
1.0
Introduction
1.1
Background of the Study
1.2
Statement of the Problems
1.3
Objective of the study
1.4
Significance of the
study
1.5
Scope and Limitation of the Study
1.6
Definition of Terms
Chapter Two
Review of Related
Literature
2.1
Definition of SME
2.2
Types of Small and medium Enterprises and Business
2.3
Features of SME
2.4
The Role of Banks to the SME
2.5
How Banks develop SME
2.6
Problems of SME
2.7
Reasons why Open SME
2.8
The Role of SME in Nigeria
2.9
Advantages of Small and medium Enterprises
2.10 Disadvantages
of SME
Chapter Three
Research Design and
Methodology
3.1
Research Design
3.2
Location of Data
3.3
Sources of Data
3.4
Sampling Techniques
Chapter Four
Data Presentation and
Analysis
4.1
Presentation of Data
Chapter Five
Summary of Findings,
Conclusions and Recommendations
5.1
Summary of Findings
5.2
Conclusions
5.3
Recommendations
Bibliography
CHAPTER ONE
1. INTRODUCTION
1.1
BACKGROUND OF THE STUDY
According to Orji (2008)
banking dates back to the early colonial period. The decline in barter system
of trades and the rise in financial transactions of the colonial government
require an institution in the form of a bank for safety and transmission
of funds. It was for this purpose that African banking corporation based on so
Africa was invited in 1892 to open a branch office in Lagos. The African
banking corporation was therefore the first modern commercial bank to open a
branch office in Lagos but its existence was made precarious by the trade
depression which hit Lagos in that year.
In the year 1894 its
operations was taken over by the bank of British west Africa. In 1899, the bank
of Nigeria was established by the royal Niger Company. In the year 1912, the
bank of British West Africa absorbed the bank of Nigeria and exercised monopoly
over banking in Nigeria.
In the year 1925, the
Barclays bank started operations in Nigeria and commercial banks joined in the
later years.
The indigenization
exercise abolished the existence of the expatriate banks in Nigeria. Their
existence was terminated for the following reasons.
1. These banks relied on the dictates of the home
office since each individual bank is not normally required to maintain a fixed
ration between its liabilities and different classes of assets.
2. The integration of the banks with parent banks
also means automatic dependence on the developed monetary and security markets
for liquid assets and investment of excess reserve and effect retardation of
the emergence of local money and capital markets.
3. The bank by virtue of their inter locking
relationship with important transnational banks are assured of credit
accommodation.
4. The operations of the banks failed to take into
consideration the credit needs of Nigeria.
The discrimination
suffered by Nigerians in secreting credit from these banks spurred them to
attempt to found their own banks. In the year 1973, the banking industry was
indigenized by the federal government acquiring 40% of the equity of foreign
banks in Nigeria. This indigenization of banking brought to an end the
existence of expatriate banks in Nigeria.
Banks are privately owned for the purpose of making profit for their owners.
They engage in financial intermediation whereby money is mobilized from the
surplus units (those who have surplus fund) and channeled to deficit units
(those who want to invest in productive activities).
The government of this country are encouraging people to establish their own
small enterprise to reduce the problem of unemployment in the country and also
reduce the rate of importation of goods some so, to produce exportable products
over the years. There has been an unresolved issue of a proper definition of
small and medium industries. This lack of an encompassing definition of SME
emanated from the criteria employed to characterize small size organization.
However, the main criteria used to classify small business ventures include
initial capital outlay, ownership structure, management style, profit level, market
share, number of employees, total asset size, type of market share, type of
industry, relative position of the firm within its industry or a combination of
two or more of the above criteria.
In most cases, the varied definition appear to be governed by the interest of
the perceived, the purpose of the definition and the stage of development in
which the definition is employed. Generally a small business is defined as one
which is owned, managed by one or two persons, influenced by the family in decision
making has no in differential organizational structure market share is small
and employ less than fifty (50)
persons.
In the third National development plan, manufacturing establishments
employing less that ten (10) people or whose investments on machinery and
equipment does not exceed six hundred thousand naira (N600,000) are regarded as
small size firm. In the same way the national economic reconstruction fund
(NERFUND) defined small and medium industries as those whose fixed assets value
do not exceed ten million naira (N10,000,000) while the central bank of Nigeria
on the other hand regard any enterprise whose annual turnover is less than five
hundred thousand naira (N500,000) as small and medium business. The center for
management development gave the definition of small and medium industry in the
policy proposal submitted to the federal government in June 1982 as
follows:
“An SME is a
manufacturing, processing or service industry involved in a factory or
production type of operations employing up to fifty (50) full time workers.
Investment in plant and machinery but excluding land and building shall not
exceed five hundred thousand naira (N500,000) Power pnat and machinery are
utilized in its operations (Ani and Nwandu 2007).
There are still more definitions of SME as still more definitions of SME as
there are authors. It could be inferred from the above definition that emphasis
by all the authors center on what we have said earlier identifying the number
of employees of the firm, sales volume capital outlay ownership structure etc.
Banks performs certain duties to SME to enable them carryout their business
effectively some of their duties are:
1. Accepting deposit
2. Granting of loan and overdraft facilities
3. Providing station reports
4. Agency services
5. Standing order
6. Provides investment advice etc.
Through these role
performed by the banks, small and medium enterprises are enabled to plan their
business properly, keep adequate records, maintain properly, keep adequate
records maintain proper accountability pursue planned expansion, utility
professional assistance, improve their knowledge through apprenticeship
programmes and formal education.
1.2
STATEMENT OF THE PROBLEM
This research has a lot of problems to address this include:
1. Determining the problems faced by small and
medium enterprise.
2. The problem of determining the role performed by
the banks towards the development of small and medium enterprise.
3. Determining the features of SME and types of
business ownership.
4. To determine the reasons why people open small
and medium business.
5. The problem of determining the contributions
made by small and medium enterprises towards the growth of Nigeria economy.
1.3
OBJECTIVE OF THE STUDY
Every research work must
have objective in the case of this research, the objectives are:
1. To extensively explain the functional role of
banks to the small and medium business.
2. To find out the problems facing SME operations
in Lagos state.
3. To know the various types of business ownership.
4. To find out some reasons why people go into
business ownership.
5. To identify the various feature of small and
medium enterprise.
6. To ascertain the role of small and medium
enterprises in the Nigerian economy.
1.4
SIGNIFICANCE OF THE STUDY
This research work is to be used for the purpose of learning. It will broaden
the mind of other researchers on the issues involved in SME and its impact on
the growth and development in Nigeria.
It will also form a basis for future work by some students who may be so much
interested in small and medium business. This study is a
dynamic one for this reason, it cannot be said to have been completely treated
in one work like this.
1.6
DEFINITION OF TERMS
Commercial Bank: it is privately owned bank it is
established for the purpose of making profit for
their owners. They are establishments that issue financial obligations (such as
demand deposits) in order to acquire funds from the public. They pool these
funds and provide them in larger amounts to business, government and
individuals for investment. It can also be viewed as institutions which serve
the purpose of channeling funds from lenders to borrowers in the form of
short-term funds, medium term funds and long term funds from lenders. In other
words, it is an institution involved in financial inter-mediation where money
is mobilized from the surplus units (those who have surplus funds) and
channeled to deficit units (those who want to invest in productive activities).
Loan: it is classified as problems credit when they
cannot
be repaid. It is a facility granted by a bank
which intended to be applied for financing a specific purpose. Virtually every
business has a credit relationship with a financial institution especially
banks. Some rely on periodic short term loans to finance temporary working
capital needs. Others primarily use long term loans to finance capital
expenditure, new acquisitions or permanent increase in capital. Regardless of
the type of loan all credit request mandate as systematic analysis of the
borrowers ability to repay.
The basic objective of credit analysis is to
assess the risk involved in extending loans to bank customers.
Fund: it can be classified as increase in the
liability or
equity account of a decrease in the asset
account. The layman’s view as it related to individuals, business organizations
or even pubic authorities represents the sum of money or possession by
individual organizations and government for the purpose of making payment and
receipts for goods and services provided to the society.
Finance: it is the possession of funds when it is
needed
for investment. The academics see finance as the
discipline that studies the science of fund management, which includes the
institutions that are involved in sourcing funds such as the money market institutions,
insurance market institutions and mortgage market institutions etc. based on
the foregoing explanations finance can rightly be defined as the science which
studies the exploration, exploration and investment of funds as well as sharing
of proceeds.
Credit: it is a special form of account payable and it
is the
most popular source of short term credit in
small and medium scale business in developed and developed economics. It
involves the purchase of goods and services and suspending payment to an agreed
future date.
Roles: according to oxford dictionary it is the
function of a
thing.
Small and medium
Business: it is a business that
engage in the production of goods and services to the society, owned
managed and controlled by the proprietor has a relatively small market share
and capable of employing two (2) to fifty (50) employees.
Department | Banking and Finance |
Project ID Code | BFN0217 |
Chapters | 5 Chapters |
No of Pages | 69 pages |
Methodology | Chi Square |
Reference | YES |
Format | Microsoft Word |
Price | ₦4000, $15 |
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Contact Us On | +2349067372103 |
Contact Us On | +2349094562208 |
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