TABLE OF CONTENT
Title page I
Table of content VI
1.0 Introduction 1
1.1 Statement of the Problem 3
1.2 Research Question 4
1.3 Objectives of the Study 4
1.4 Research Hypothesis. 5
Definition of Terms 8
Plan of the Study 10
2.0 Literary Review 11
2.1 Meaning of Bad Debt 12
of Bad Debt of Nigeria Money
Deposit Bank in Nigeria. 13
Effects of bad and doubtful debt on
Banks in Nigeria. 19
Risk Analysis on Money Deposit Bank in Nigeria 22
Sources of data 25
Population of the Study 26
Sample Size 26
Methods of Data Collection 27
Methods of Data Analysis. 27
of the Study 28
4.0 Data Presentation, Analysis and
Presentation of Result 29
4.2 Data Analysis 32
4.3 Test of
General Statement of the Hypothesis 37
4.4 Interpretations of results. 39
Conclusion and Recommendation 41
5.1 Summary 41
5.2 Conclusion 44
5.3 Recommendation 46
Among the industrial sectors in
Nigeria today, banking sector arouses the public interest most it is the most
visible and of the fastest growing section in the economy a past from the fact that
the monetary of every public guideline document issued by the central bank of
Nigeria in January of every tear regulates the activities of the entire economy
the banking sectors is responsible for carrying out most of the policy issued
to frequent controls and reputations.
popular jargon, the banking sectors has become one of the most critical
sectors and commanding height of the economy with wide implications on the
level and direction of economic growth and transformation and such sensitive
issues as the rates of unemployment and inflation which directly affect the
lives of the people banking sector is without doubt of the fastest growing
industries in the country today from total 26 in 1980 the number of commercial
and merchant banks in the country growing steadily to 40 in 1985 where it
stabilized until it increase to about 49 in 1987 beginning from 1987 and
following the introduction of structural adjustment programme (SAP) in 1986
there had been a rapid growth in the number of bank increased by 15 i.e 30% to
reach 66 and additional 15 joined it in 1989 which witnessed 21 new merchants
to bring the total number of commercial and merchant bank to 102. before the
government placed temporary ban on the opening of banks in 1991 there was not
less than 125 bank operating in the country from N12 million and N20 million
for merchant and commercial bank respectively paid up capital increased to N40
million and N50 million one notable implication from the development is the
sudden rise in the volume of bad doubtful account which bank are compelled to
carry in their books the increasing number of this problem loans had been on
granted challenges facing in particular the old generation of bank usually
reffered to as the “Big three First Bank of Nigeria Plc. The Union Bank of
The problem posed by carrying large
volume of bad loans or non-performing accounts was not fully recognized until
in November 1990 when the central bank introduced the prudential guidelines in
line with the general standard all over the world to ask the in the country
assess themselves filling thereby determine how wealthy or prudent they are in
their loan credit management.
Most banks cannot unequivocally declare
that they have been introduced by problem loan. Certainly, it is a way of life in
those tumultuous times of banking that virtually every one of them if faced
problem or so-called works out loans.
Another important reason is to decline
in the economic fortune which gripped the Nigeria economy.
1.1 STATEMENT OF THE PROBLEM
researcher therefore would like
What are the causes of bad debt?
Why provisions for bad debt are made?
How bad debts are written off?
How banks are financial institutions
managing bad debt?
How banks estimate provision for bad
1.2 RESEARCH QUESTION
How can bank manage a bad debt?
What is the effect of bad and doubtful
What is the effect of rising machine of
bad debts on bank operation?
Can bad debt affect the profit making of
What are the signs to know when loan is
What are the factors to consider when
OF THE STUDY
broadax objectives of the study are to analysis the effects to rising machine
of bad debts on banking operation since 1986 when the federal government
adopted SAP. The focus on how to mange loans and reclaim the collateral assets
securing them. In specific terms the study will inquire into the rising waves
of bad doubtful account in our banks in general and First Bank Nigeria Plc in
particular the aim is to determine the share of the major actors or factor in
granting a loan.
The banks and
The government or the economic
the study will examine impact of the prudential guidelines on the management of
loans by banks since 1990 when the guidelines came into effect. What impact it
has produces on the reporting system of bank. Before and after prudential
guidelines and finally draw some policy lessons and predictions for the future.
Finally, the study will aspire to
provide the essential strategies that may be used for loan recovery once a
debtor enters bankruptcy.
1.4 RESEARCH HYPOTHSIS
The general hypothesis to be tested in
= Bad debt will not have positive impact on Nigeria money deposit bank.
= Bad debt will have positive impact on the Nigeria money deposit bank.
1.7 SIGNIFICANCE OF
motivation for eh study arises from the research interest in tracking the
effect of economic reforms within the structural adjustment programme since
deregulation of financial system of the economic reforms is expected to act the
volume and pattern of landing by banks and the profitability of banks. It is
necessary to investigate the extent to which profit that are being declare by
banks actually reflect their true profitability position. Whether adequate
precaution have been taken in their granting loans. The structural weakness of
these bank is reffered in the heavy bad debt port folio, which is fact eroding
their capital base. The introductory of prudential guideline has therefore
exposed the weak foundation and the misfortune arising from bad debt structure
data generated from the annual reports of banks with regards to eh volume of
the bad debts have been fraught difficulties until the introduction of the
it is a policy objective of the monetary authorities to recognize only income
that is earned and not paper profits.
it is also the objective of the monetary authorities to confirm with international
it is to make banks more prudent in their lending decision through reducing
incidence of bad and doubtful account.
it is to encourage bankers to become solid finally able in Ibadan the customers are partially
serious limitation of the study is the problem of data collection. Through thus
is not peculiar to this study. It must be recognized that not until the
prudential guideline came into effect November 1990. Most neither banks nor do
they realize the need to make adequate provision of data for bad and doubtful
debts what banks did at best was to make petty provisions for those classes of
1.8 SCOPE OF THE STUDY
and their rules differ from one country to another similarly the
infrastructure, the role of financial institution and the attitude and type of
introduction by regulation at least larger determined what types of investment
instrument are available while exchanger central and tactic system effect the
attractiveness of such instrument to foreign invests.
base and reason of the project write up will be limited through and detailed
investigated on the effect of bad debt in Nigeria money deposit bank in Nigeria
economic particularly as it relate to the first bank of Nigeria plc.
1.9 DEFINITION OF TERMS
The act of running a business or the process of controlling, planning, organizing
and co-ordinating a business or an organization.
It is an account renewable that will likely remain uncollectible and will be
The total number of people who live in a particular area, city or country.
The relationship between production trade and the supply of money in a
particular region or country.
NIGERIA DEPOSIT BANK:
It is an institution that accept money from the public for safekeeping
The possibility of something bad happening at sometime in the future.
Types of Risk
Risk: a category of risk in which loss is the only
possible outcome there is no beneficial result.
Risk: this type of risk involves gambling you might win,
you might lose the outcome may be profit or loss example brokerage, smuggling
It is the system that allows the transfer of money between savers (and
investor) and borrowers.
Is the process by which the monetary authority of a country controls the supply
of money in a country.
a general rise in the prices of goods and services in a particular country
resulting in fall value of money.
LOANS AND OVERDRAFT:
loan is a money borrow from an individual while overdraft is the amount that
you own a bank when you have spent more than what you have in your account.
the number of people not having a job.
bands that deals with large business.
a national bank that does business with the government and other banks, and
issued country currency.
a person or an organization that buys something from store/business.
a person who owns a bank or has an important ob at a bank.
1.10 PLAN OF THE STUDY
one contains introduction
two contains literature review
three contains data presentation analysis and interpretation of results.
five contains summary, conclusion and recommendations.
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