Effective Management of Loans and Advances in Nigeria
CHAPTER ONE
OBJECTIVES OF THE STUDY
The special objectives for the study are to:
- Know the benefits of efficient and effective management of loans and advances in commercial banks.
- Determine the cause of the present poor management of loans and advances in Nigeria commercial banks.
- Assets the extent and depth of the poor management of commercial banks loans and advances in Nigerian economy.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Theoretical Framework
Commercial Loan Theory
The oldest theory of banking is the commercial loan theory, also called the real bills doctrine. The commercial loan theory holds that banks should lend only on short term, self-liquidating, commercial paper. According to Hosna & Manzura, (2009), the commercial loan theory is geared to influence persuasively both the bank lending and the general economic activities. Strict adoption of this theory will reveal that it is expected to serve as a monetary supply to changes in aggregate economic activity. The popularity of this doctrine among DepositMoney Banks (DMBs) in Nigeria is evident. Nigerian bankers believe that since their resources were repayable at short notice, such depositors’ monies should be employed accordingly in short-term loans. Kargi, (2011) posited that the strong tie to this conception is rather orthodox if consideration is given to the fact that at the time of the supremacy of the theory, there were little or no secondary reserve assets, which could have served as a liquidity buffer for the bank. More so, this theory fails to consider the credit needs of Nigeria’s developing economy. It has not encouraged banks to fund the purchases of plants, equipment, land, and home-ownership. For a theory to maintain that all loans should be liquidated in the normal course of business shows its failure to recognize the relative stability of bank deposits. Whereas, demand deposits are on demand, all depositors are not likely to demand payment at the same time. Thus, stability of deposits enables a bank to extend funds for a reasonable long period without danger of illiquidity. Though, with its flaws, the commercial loan theory, or real bills doctrine has been a persistent theory of banking. Vestiges of it still remain in the structure of bank regulatory agencies, bank examination procedures and the thinking of many bankers. One cannot understand contemporary banking without an understanding of our banking history, and cannot understand banking history without an understanding of the commercial loan theory.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain effective Management of Loans and Advances 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 effective Management of Loans and Advances in Nigeria
Summary
This study was on effective Management of Loans and Advances in Nigeria. Three objectives were raised which included: Know the benefits of efficient and effective management of loans and advances in commercial banks, determine the cause of the present poor management of loans and advances in Nigeria commercial banks and assets the extent and depth of the poor management of commercial banks loans and advances in Nigerian economy. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from first bank, Lagos state. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
It would be concluded that loan management has a positive and statistically significant relationship with DPS of quoted banks Industry at 5% level of significance.
Recommendation
Management of deposit money banks in Nigeria should enhance their skills in credit analysis and loan management
Credit officers should intensify efforts on their job, routine check on customers and prudent approach to recover loans and advances granted to customers
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