The Impact of Accountants in Credit and Loan Control Management in Micro Finance Banks
CHAPTER ONE
Objective of study
The following are primary objectives of this study:
- To investigate the role of accountants in credit and loan management in micro finance banks.
- To assess accountants’ influence on credit and loan management in micro finance banks.
- To ascertain the impact of the accountant on achieving effective and efficient collateral security on loan issuance.
Chapter two
Related literature
Introduction
Lafourcade et al., (2005) define microfinance as the process of supplying financial services in the form of loans, savings, money transfers, insurance, and others to low-income people. The Central Bank of Nigeria (2017) describes microfinance banks (MFBs) as those with the primary responsibility of providing financial services to rural and poor microenterprises and households nationwide. According to Oluyombo, (2007) and as reported by Afolabi et al., (2020b), MFBs are globally accepted media of reaching people or firms that are either not served at all or inadequately served by the normal commercial banks. In any economy, microfinance banks play these important roles on either side of the balance sheet. They offer financial support to other segments by facilitating flow of funds through lending and the provision of liquidity supports. Nyagol & Onditi, (2016) opine that the microfinance banking subsector supports low-end entrepreneurs operating SMEs that form the bulk of many economies and at such the sector is key to economic development. Vincent et al., (2014) opine that MFBs operate in an environment where customers are without credit histories or necessarily predictable borrowing behaviours making it more necessary to deal with credit risk management. Nikolaidou & Vogiazas, (2014) define credit risk management among MFBs as the combination of coordinated tasks and activities for controlling and directing risks confronted by the banks through the use of key risk management techniques which are in agreement with their objectives.
Credit Management
Credit management is one of the most important activities in any company and cannot be overlooked by any economic enterprise engaged in credit irrespective of its business nature. It is the process to ensure that customers will pay for the products delivered or the services rendered. Myers and Brealey (2003) describe credit management as methods and strategies adopted by a firm to ensure that they maintain an optimal level of credit and its effective management. It is an aspect of financial management involving credit analysis, credit rating, credit classification and credit reporting. Nelson (2002) views credit management as simply the means by which an entity manages its credit sales. It is a prerequisite for any entity dealing with credit transactions since it is impossible to have a zero credit or default risk. The higher the amount of accounts receivables and their age, the higher the finance costs incurred to maintain them.
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.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine the impact of accountant in credit and loan control management in micro fiancé bank. Fin trust finance bank in in Lagos forms the population of the study.
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.
TEST OF HYPOTHESIS
H0: there is no role of accountants in credit and loan management in micro finance banks
H1: there is role of accountants in credit and loan management in micro finance banks
H0: there is no impact of the accountant on achieving effective and efficient collateral security on loan issuance
H2: there is impact of the accountant on achieving effective and efficient collateral security on loan issuance.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain the impact of accountant in credit and loan control management in micro fiancé banks. 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 the challenges of the accountant in credit and loan control management in micro fiancé banks
Summary
This study was on the impact of accountant in credit and loan control management in micro fiancé banks. Three objectives were raised which included; To investigate the role of accountants in credit and loan management in micro finance banks, to assess accountants’ influence on credit and loan management in micro finance banks and to ascertain the impact of the accountant on achieving effective and efficient collateral security on loan issuance. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from Fina trust micro finance bank in Lagos. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
The study revealed that a unit increase in client appraisal would lead to increase in financial performance of Fina trust micro finance bank; this is an indication that there was positive association between client appraisal and financial performance of fina trust micro finance bank, an increase in credit risk control would lead to increase in financial performance of fina trust micro finance, which shows that there was positive relationship between financial performance of fina trust micro finance and credit risk control and a unit increase in collection policy would lead to increase in performance; this is an indication that there was a positive relationship between financial performance of fina trust Micro finance and collection policy. Client appraisal, credit risk control and collection policy significantly influence financial performance of fina trust Micro finance.
Recommendation
The study also recommends that there is need for fina trust micro finance to enhance their client appraisal techniques so as to improve their financial performance. Through client appraisal techniques, the micro finance bank will be able to know credit worth clients and thus reduce their non-performing loans. There is also need for micro finance bank to enhance their credit risk control this will help in decreasing default levels as well as their non-performing loans. This will help in improving their financial performance.
Reference
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