ABSTRACT
This research work was
undertaken in order to appraise the effectives of credit administration in
banking industry.
We narrowed or
investigation to four (4) commercials bank in Nigeria (Union Bank, UBA,
Afribank and Bank PHB)
The method of study
adopted includes data obtained from both primary and secondary sources. The
primary data mostly involves personal interviews, and questionnaire
administered to the respondents of the management and staff of these banks. The
secondary data was mainly information collected from textbooks, journals,
magazines, unpublished monograms and various works of professional in the
related fields to aid our inquiry.
The total number of
questionnaires administered to both management and staff of the banks amounted
to 98 and a total of 80 questionnaires were recovery showing about 82%, out of
which 18 was void representing 18%.
The Spearman Rank order
correlation co-efficient was sued as a statistical tool in testing the three
(3) Hypotheses.
The out come of the
study proves that loans and advances constitute major component of the asset s
portfolio. That proper and adequate attention must be given to administration
and management of credit.
Review of credit
guideline frequently is generally a more effective control credit.
The summary of the
findings revealed that the fundamental skill and knowledge of customers and the
economy enable the banker to make rational decision when lending.
TABLE OF CONTENT
Chapter
one
Introduction
1.1
Overview
1.2
Statement of
problem
1.3
Purpose of
study
1.4
Research
question
1.5
Research
Hypothesis
1.6
Significance of the
study
1.7
Scope of the
Study
1.8
Limitation of the
study
1.9
Definition of
Terms
1.10
Organization of the
study.
Reference
Chapter Two.
Literature
review
2.0
Introduction
2.1 Bank Credit Deposit
2.2TheLegal and
Regulatory framework for Granting Credit
2.3 Knowledge of
Customer
2.4 Establishing a
Credit Policy
2.5 Forms of Credit
Facilities
2.6 The Principles of
Lending
2.7 Credit Documentation
2.8 Source of Credit
Information
2.9 Credit Review or
Supervision
2.10 Internal Cause of
Bad Credit
2.11 Identification of
Problem Loans
2.12 Management of
Problem Credit
2.13 loan Growth and
Quality
2.14 Constitution in
credit Creation
2.15 Scope of Credit
Investigation
2.16 Functions of Credit
Department
2.17 Loan Recovery
Strategies
2.18 Loan
Insurance
2.19 Summary
Reference
Chapter three
3.0 Research Methodology
3.1 Introduction
3.2 Research Design
3.3 Population of the
Study
3.4 Determination of
Sample
Size
3.5 Method/Instrument of
Data Collection
3.6 Data analysis and
techniques
3.7 Decision rule
3.8 Operationalization
of Major
Variables
Chapter
four
4.0
Data presentation and
analysis.
4.1
Introduction
4.2
Data
Presentation
4.3
Distributed
Questionnaire
4.4
Questionnaire
Analysis
4.5
Testing of
Hypothesis
4.6
Summary of Description.
Chapter five
5.1
Discussion of
finding
5.2
Conclusion
5.3
Recommendation
References
Bibliography
Appendix One
Appendix two
CHAPTER ONE
1.0
INTRODUCTION
1.1
OVERVIEW
Credit Administration
and management in any financial market is one basic function of banks that
accounts for her large share of income. That banking
operation in Nigeria and the world over still come alive
today is a function of how effective this key role of banks is being
played.
B.C. Okocha (2000)
“The level of performance of service and realization of objective
for which the organization is set up is a function of the quality of
management polices and procedures followed to achieved these
set objectives.
Banking Institutions are created with the fundamental or cardinal
function (objectives) of deposit acceptance and credit
extension for the development and expansion of the real sector of the
economy.
Banks can only
remain as a veritable tool for economic growth and wealth maximization if
there is a positive correlation between management and objective.
The aggregate
economic growth in both micro and macro economy induced investors, government
and corporate bodies to appreciate the significance of bank credit a s a
major source through which business could be effectively
financed for wealth maximization.
The growing
concern about business growth which has been dwindled by inaccessibility
of credit occasioned by stringent conditions attached,
the untold hardship of loan interest, banks sharp practices and non
adherence to credit guidelines are basic issues the
researcher seek to address.
Abasss A. Shiro (2004)
“Credit creation presents a good maximization opportunity to
the banking industries to achieve its objectives as the basis by
enlarging the money supply base and raising the general investment level
of the country’. Lending and credit administration is very vital to banks
which, if not property carried out can hinder the effective operations of the
banks, improper lending decision which leads to accumulation of huge
bad debts that adversely affect banks effectiveness however.
Therefore, it is expedient that bank managers
should be equipped with better information, principles and techniques
required for effective lending rather that regarding them as a mere
guidelines which have limitation. Lending is highly subjective in nature, the
final analysis depends on the judgment of the lender, hence in
making final judgment ,the lender must review all the techniques, principles,
and knowledge acquired through environmental and projects analysis.
The credit character and prospects of the borrower must also be
scrutinized.
It is against this
background that the bank decides the quantum of lending appropriate to the
prospective demand. This quantum has to be optimum volume in terms and
conditions that would satisfy the banking objectives of the lender.
The qualities of credit
administration have direct impact on the banks effectiveness, and
this could be measured with various parameters as profitability,
customer satisfaction, and shareholders satisfaction, volume of bad debts,
employee motivation and attainment of the general objectives of the bank.
1.2 STATEMENT
OF PROBLEMS
Today the increasing
financial improprieties, insolvency, non-performing loan, distress in
banks and near collapse of the financial system accounted for the cry and quest
by business community for total economic recovery.
This study
identified the following problems and suggest ways of solving them.
1. Stringent conditions for accessibility of
credit.
2. Unbearable financial burdens that bank customers
bear in the course of repaying these loans.
3. The unbearable interest charges, penalties and
unclassified charges.
4. Banks indulge in all sort of sharp practices,
cutting of corner and non-adherence to policy guidelines set out for
credit management.
5. Bank managers do not adhere to internal
rules and mechanisms in lending credit, it translates to
non-performing loans as lender and beneficiary connivance to short-cut
procedures.
6. The Apex bank lacks adequate surveillance and
strategy to forestall discipline and enforce compliance with these regulations
and guidelines.
1.3 PURPOSE
OF THE STUDY
The rate of banks failure in recent past, has called for great concern by
depositors, government, financial regulators and stakeholders who advocate for
strong and viable economy based on sound financial sector to
provide most needed lubricant in terns of credit lending to aid economic growth
and development.
However, the major
reasons advanced for these failures are basically related to
improper lending habit of the banks, couple with slow industrial development,
inflation and unemployment which make it impossible to either
secure the credit facility.
Therefore, in view of
the problems highlighted above the purpose of this study is to:
a) Identify
how banks manage credit facility effectively to ensure prompt repayment as at
when due, and various reasons for default.
b) Reveal
the problem associated with the effective and efficient management of credit,
and find out the impact of effective management in an economy.
c) To
initiate or suggest method of improving credit management in line with banks
internal and external factors (monetary guidelines).
1.4 RESEARCH QUESTIONS
In view of this research topic, a wide and extensive form of
research
questions would be asked so that various data collected could be analyzed using
statistical method. The following are the research questions in this study.
1. What impact and action do banks take in managing
their credit facilities effectively to ensure prompt repayment as at when due?
2. What is the suggested method of improving
credit management inline with banks internal and external factors (monetary
guidelines).
3. How do the banks reveal the problem associated
with the effective and efficient management of credit?
4. What are the reasons for increase in
non-performing loans and non-security of loan facility in the financial sector
of the economy?
1.5
RESEARCH HYPOTHESIS
The following hypothetical statement are necessary to guide us in determining
the answers to the above stated problems and questions.
HYPOTHESIS 1
H0:
There is no significant relationship between accountability in credit
management and the profitability and total output in
banks.
HYPOTHESIS 2
H0:
There is no significant relationship between Quality/quantity of
loan asset and bank’s sustainability and development
HYPOTHESIS 3
H0:
Regulation and supervision of bank has no significant
relationship with overall growth and
development.
1.6
SIGNIFICANCE OF THE STUDY
Olowe R.A (1997):
“banking Industry in Nigeria does not operate in isolation of global
banking system that are facilitated by information technology which
make bank services and products customer oriented”. Therefore, its present
level of operations and development is far below expectation in terms of
products ,services and effective resource mobilization for her lending as
banks are globally viewed as necessary medium to propel other sectors
through investment and credit lending to achieve desired growth
development.
Therefore management of credit is an aspect of banking services that has been
grossly abused and mismanaged.
This study is therefore expected to provide useful suggestion and
recommendation to most problems affecting effective and
efficient credit management in banks, most importantly this study will be
useful to managers of banks, prospective facility seekers to expose
them to the necessary requirements by banks in terms of security,
financial information for analysis, project prospects etc. This study will be
of immense benefit to the government and its agencies that are responsible for
banking supervision.
This work will also be important to students, lecturers of
social science involve in research work on the area of banking in general
secondary data source.
1.7 SCOPE
OF THE STUDY
This study is limited to the credit administration and management in deposit
money banks in Nigeria.
The study is also limited to the information obtained from the geographical
area of the study (ABA) as a basis for making general assumption on the
performance of Nigerian deposit money banks in terms of credit management and
administration.
The reluctance of the top management and staff of the banks in giving out some
relevant information due to oath of secrecy poses constraint to the research
work.
1.9
DEFINITION OF TERMS:
Ø Monetary Policy: This
is policy initiated by government to regulate the volume of money
in circulation.
Ø Credit Limit: This is a
ceiling beyond which a bank will not grant additional facility to customers.
Ø Global Banking: This
connotes the interface of banking services and products through
information technology network, which is more customer oriented than
traditional banking.
Ø Credit Management: This
involves planning and controlling collection of loan and advances in line
with management corporate plan of maximizing shareholders wealth.
Ø Distress Bank: These are
banks with problems of liquidity. Poor earnings and high volume of
non-performing assets.
1.10
ORGANIZATION OF THE STUDY
This work is
arranged into five chapters.
Chapter one examines the introduction; purposes, here
is discussed the overview, statement of the problem, purpose of the
study, research questions, scope of the study, significance of the study,
limitation of the study and definition of terms.
Chapter Two deals with the review of
related literature, in other words it views the works of
other researchers in the field. This is mostly from textbooks, journals,
internets and other relevant materials.
Chapter three is on the research
methodology. It covers the research design, sampling procedures/sample size
determination, data collection methods and data analysis techniques.
Chapter four is on the
presentation and analysis of data, the hypothesis formulated in
chapter one is tested statically and recommendations with reference to the
problems studied.
Department | Banking and Finance |
Project ID Code | BFN0266 |
Chapters | 5 Chapters |
No of Pages | 45 pages |
Reference | YES |
Format | Microsoft Word |
Price | ₦4000, $15 |
|
|
Contact Us On | +2347043069458 |