TABLE OF CONTENT
of content vi
Statement of the research problem
Objectives of the study
Statement of the study
Significance of the study
Definition of terms
Plan of the study
Historical background of the case study
Source of data
Population of the study
Method of data analysis
Limitation to methodology
Data presentation analysis and interpretation of results
Interpretation of results
Summary Conclusion and Recommendations.
1.1 BACKGROUND OF THE STUDY
In a modern economy, there is distinction between the
surplus economic units and the deficit economic units and in consequence a
separation of the savings investment mechanism. This has necessitated the
existence of financial institution whose job includes the transfer of found
from savers to investors. One of such institution is the money deposit banks,
the intermediating roles of the money deposit bank place them in a position of
trustees of the saving of the widely depressed surplus economy units as well as
the determinant of the rate and shade of the economic development .the
techniques employed by banker in the intermediary function should provide them
with perfect knowledge of the out-come of lending such that funds will be
allocated to investments in which the probability of full payment is certain.
However, in practice no such tools can be found in the decision of the lending
banker. Virtually all lending decision
are made under creditors on uncertainty associated with lending decision,
situation are so great that the concept of risk and risk analysis needs to be
employed by lending bankers in order to facilitate sound decision making and
judgment. This statement implies that if risk are to be objective assessed,
lending delicious by the money deposit bank should be base less on quantitative
data and more on principle too subjective to proved sound and unbiased
judgment. Furthermore the bank depends heavily on historical information as a
basis for decision making.
Apparently aware of the inadequacies of his decision base
the lending banker has often sought solace in tangible and marketable assets as
security giving the impression that lending against such security is an
insurance against bad debt. This makes the bankers complacent his loan
portfolio. The increasing trend of provision for bad and doubtful debt in most
money deposit banks is a major source of concern not only to management but
also to the shareholder are becoming more aware of the dangers posed by these
debts. Bad depts. destroy of the earning asset of bank such as loan and advance
which have been described as the main source of earning and also determines the
liquidity and solvency which generate two major problems that profitability and
liquidity, has to earn sufficient income to meet its operating cost and to have
adequate return on its investment.
OF THE SEARCH PROBLEM
In view of the consequences of bad debt in Nigeria money
deposit banks, it is necessary to form emulate some research question which
will enable the research formulate statistical table for testing hypothesis.
Has inadequate collateral security provision by borrowers
caused bad debt in union bank of Nigeria plc?
Does fund diversion have any effect on bad debt of union
bank of Nigeria plc?
To what extent has government intervention in lending
policies of money deposit bank influenced bad debt in union bank of Nigeria
To what extent does improper project evaluation influenced
bad debt of union bank of Nigeria plc?
1.3 OBJECTIVE OF THE STUDY
i. To determine
and appraise the lending procedure of banks using union bank of Nigeria plc as
a case study with a view to highlighting the effectiveness and adequacy or
otherwise the credit management policy of Nigerian banks in reducing the
occurrence and consequences of bad debts.
ii. to highlight the rate at which
inadequate collateral security provision by borrowers increases the incidences
of bad debt in Nigeria.
determine whether fund diversion has any effect on bad debt of money deposit
banks in Nigerian.
iv. To ascertain
the extent to which government intervention in lending policies of money
deposit bank has influenced bad debts in Nigerian money deposit banks.
Banks have direct influence on union bank of Nigeria plc,
Ho: improper project evaluation has no significant
relationship with bad debt in union bank of Nigeria plc.
project evaluation has direct relationship with bad debt in union bank of
1.4 SIGNIFICANCE OF THE STUDY
It is hardly an exaggeration that the difference between the
success and the failure in the banking industry is in the effective management
of the banks loans and advance. Efficient loan management it vital to the
protection of assets and the achievements of adequate returns to investment. Though
much work abound in the literature of the technique of lending. The methods of
securing such lending and the pitfalls that await the unwary bankers. By
comparison it appears to be very little in point on the subject of loan
management and recovery.
A study of this subject will therefore be a addition to the
existing volume of banking literature.
Effective loan management recognized that beyond the
application of sound banking principles whenever a loan is made, there is need
for urgency in appreciating the point when a loan begins to look doubtful in
arriving at a decision as to the appropriate action and in taking that action.
This will enable the bank to at least obtain full payment including accrued
interest or at worst to mitigate the capital loss in the face of increase
competition drug banks, future profits are likely to be harder to come by and
since bad debts are a charge against profits it is appropriate that we review
the methods, proportions and margins of lending to b ad and doubtful debts.
Hence the significance of this study to bankers will enable
them to appreciate an appraisal of their lending and control mechanism now that
they are expected to lend under tight monetary conditions.
The economy as a whole will benefit from the expected contributions
to the development of the economy left with more profits to enable them make
the expected contributions to the development of the economy.
1.5 THE SCOPE OF THE STUDY
In the study of credit management in Nigeria, union bank of
Nigeria plc was used for my analysis. All reference therefore relate to union
bank of Nigeria plc. A six year period covering 1988-1993 will be studied.
OF THE STUDY
The limitations of this study include some of unable
constraints problems encountered in the process. They are as follows.
Finance the problem of finance was adopt left out in the
course of research to this study. This type of study required adequate money
and time to enable the researcher visit the necessary places for collection of
data. Insufficient fund hindered an in depth study of this reach since it ideas
financed from meager pocket money of the researcher.
Non – availability of records: this is one of the most
important limiting factors in the course of the study. This include the problems
of easily getting the appropriate data due to bureaucracy which hinders the
information flow in the country.
Non challant attitude of bank official: the reluctance of
bank official to reveal information on the Neal for this study for fear of
breach of duty of secrecy to customer’s exposure of banks administrative short.
Ignorance of respondent/ borrowers: most bank customer were
semi illiterate and most often it was very difficult to collect adequate
required from them.
Time: since the study is one of the many courses offered by
the researcher. The researcher was constrained by time to carry out an
indent research on the study
1.6 DEFINITIONS OF TERMS
Debt: this is what one owner to another person
Loan: a loan is a credit arrangement; a security is pledged
and must be repaid with interest over a stipulated period of time.
Overdraft: this is a credit arrangement by banks to their
customer to withdraw money over and above that what he has in the account.
Default: this means failure to pay one’s debt for credit
extended which has fallen due.
1.7 PLAN OF THE STUDY
The purpose of this study is to identify the empirical
analysis of credit management and the incident of bad debt in Nigeria money
deposit bank chapter one, background of the study, statement of the research
problem, objective of the study,
Significance of the study, the scope of the study,
definition of terms. Chapter two, literature review, chapter three, research
methodology, sources of data, population of the study, sample size determination,
instrument for data collection, chapter four.
Data presentation and analysis, data presentation and survey
of findings, chapter false, summary conclusion and recommendations, summary,
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