Effect of Bank Lending on the Development of the Nigerian Economy
Chapter One
THE OBJECTIVE OF THE STUDY
The broad objectives of this research is to identify ways of enhancing economic growth through bank lending, the specific objectives are:
- To examine the impact of credit facilities on the economic development
- To determine the extent to which lending has contributed to the growth of Nigeria economy.
- To examine the effect of lending rate on the economy.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
OVERVIEW OF THE NIGERIA BANKING SYSTEM
The entire banking system in Nigeria appears to be the most inconstant in Africa due to frequent changes in government and other policies obtainable at a particular point in time.
The Nigeria banks can be functionally categorized into four such as the central bank of Nigeria, the commercial, merchant bank, and development bank (Ajene 1997).
STRUCTURAL OF NIGERIA BANKING SYSTEM
Below gives of pictorial representation of the structure of the Nigeria banking system
CENTRAL BANK OF NIGERIA
A central bank occupies a unique position in the monetary and the banking system of any country in which it operates. Thus it could be deduced that central bank stands at the apex of the banking system of her country.
It is the government representative in the banking sector and acts mainly as bankers to the government. It has a very close economy advising both the government on monetary policies and implementing the policies on behalf of the government (Adekanye 1986).
It was through Mr. Loynes recommendation that culminated in the establishment of the central bank of Nigeria in 1958 by the central bank ordinance of the year.CBN opened it’s door for business on 1st July 1959, the reason behind the establishment of the CBN was serious short coming of the west African currency board, which was established in 1912 such indifferences include:-
- The currency of the West African currency board (WACB) issued was not an independent currency matter of expatriate sterling.
- WACB did nothing to train African in the monetary management
- The WACB did nothing to develop the banking system and banking habit on the country (Onyia 2001) section 4 of the 1958 ordinance spelt out the principal objectives of the bank such as:-
CHAPTER THREE
RESEARCH METHODOLOGY
RESEARCH DESIGN
The research design used in this study is essentially descriptive and analytically supported with sources of data obtained from both primary and secondary sources.
POPULATION OF THE STUDY
According to Ifiden, S.E and Ifida, E.I (2007) population is the entire entity that is of interest to the researcher, it is the aggregate of all elements that conform to some designated set of specification.
The population of the research work comprises of top management and personnel department of the bank. First Bank of Nigeria.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
The presentation of the data collected would be by tables; these tables would be used to analyze the data collected via the administered questionnaires
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
SUMMARY OF FINDINGS
From the analysis the result of chi – square statistical test of the hypothesis stated the following were shown
- The credit facilities has a significant impact on the Nigerian economy as revealed in question 8 which shows that 16 – 73% of the responses received were of the option that credit facilities has significant impact on the Nigerian economy also the X2calculated is greater than the critical value (4.54 > 3.84), therefore the null hypothesis (Ho) is rejected and the alternative hypothesis (Hi) is accepted.
- It was also discovered that lending, has contributed positively to the growth of Nigerian economy as revealed in the question which shows that 18 representing 82% of the responses received were of the opinion that lending has contributed positively to the growth of the Nigeria economy. Also looking at the x2the calculated value id greater than the critical value at 0.05 level of significance (8.90>3.84)
- Finally, hypothesis three (3) which states that lending rate has effectively contributed to the development of the Nigerian economy shows that 17 representing 77% of the responses agreed with the above assertion also the x2calculated valued is greater than the critical value (6.54>3.84), therefore the null hypothesis (Ho) is rejected and the alternative hypothesis (Hi) is accepted. The researcher states that lending rate has effectively contributed to the development of the Nigerian economy.
CONCLUSION
To manage loan and credit effectively, efforts have been made to obey and respect the canons of good lending and ensure adequate control and supervision on the facility extended within the framework of government regulation and guideline
Sound lending requires a clear well articulated and easily accessible policy document which spells out the philosophy of lending.
It is instructive to note that no one can have complete control of his environment which is banking is dominating by external factors such a economic and political situation and unpredictable behaviour of human beings.
All these factors are subject to change and therefore increase the risk of bank lending, losses are normal in the business of lending money but they must not be disproportionately high and it critically looked into the effectively implemented, bank lending must have effective and efficient impact in the development of the Nigerian economy.
RECOMMENDATIONS OF THE STUDY
Since no organization, both private and public who sort for their capital through bank lending can function effectively without the basic tools of empirical analysis of bank lending, therefore it is essential that the under listed recommendations are observed in order to derive maximum benefit from them.
- All sectors of the economy are encourage to obtain their capital from banks.
- Commercial banks are advise to practices the universal banking system that empowered them to grant both short – term and medium term credit facilities
- Government should also as a matter of facts educate the rural farmers on method of obtaining credit facilities through the help of agricultural extension officers and also extend lending to the rural areas.
- Every bank should ensure that fraud and error are prevented in the process of lending with the help of internal audit unit
REFERENCES
- Adekanye F. (1986) practical of banking Vol. colling international textbooks, London in association with Nig institute of bankers
- Ani Nnenna B. (1999) an overview to entrepreneurial development new generation books
- Anyanwaokoro .M. (1999) theory and policy of money and banking hosanna publication Enugu
- Beck T.J demirgue Kunt A & Levine R (2005) “bank supervision and corruption in lending” Niger working paper No 11498
- Clement J.N and Dyer L.S (1997) balance sheet and the lending banker Europe
- Akpala J.I (2011) banking operations published by JACVEN Nigeria
- Obasikene A.C (2000) understanding bank credit analysis hugotez publication Enugu
