This research is titled
“Accounting Problems in Microfinance Banks A study of selected microfinance
banks in Abakaliki metropolis of Ebonyi
State.” This study analyzed
the various categories of accounting problems facing microfinance banks. This
was achieved through the use of survey research design and methodology which
included questionnaires, oral interviews, discussion and study of related
literature, inference and conclusion. In the test of hypothesis, chi-square
technique was used. Some findings were made after proper analysis of data which
include that Accounting problems affect the performance of Microfinance Bank.
The researcher made the following recommendations: proper teaching and training
of staff, provision of conducive environment both staff and customers,
employment of qualified personnel in terms of education and experience in their
field, and use of modern mechanize and computerized machines to facilitate the
operation of microfinance banks.
hitherto been very essential to human invention and economically aid to the
society as far as business transactions are concerned. Thus, bank can be seen
as a service-oriented to individual and the society at large. That is the
reason Peterson (2007) viewed banks as the agencies or institution which are
service-oriented to individual, companies and various organizations etc. Bank
is giving at various financial services such as deposit collection, credit
delivery and dealing with negotiable instruments and securities in issue of
service charges, interests etc. Similarly, a bank is also seen as an
institution or a person licensed as such whose major business is to accept
deposits that are repayable on demand or at short notices and as well lending
it out with a view to make profit in return.
Based on these
analyses, Anyanwaokoro, (2001)
emphasized that the main aim and objective of banks is that of deposit
collection and credit delivery while all other services that banks render are
complementary to these two sides of financial intermediation-deposit collection
and credit extension.
can be traced back to the operation of the early London goldsmith who accepted gold deposit
from the London
merchant and keep them for safe custody and upon and agreed charge on demand.
That is to say that the charge is payable whenever they draw their money or
gold. However, the development of Nigeria banking services has its
origin from the colonial days. The activities of the colonial merchants in the
former West African colonies and the establishment of settled territorial
government created the need for local based financial institutions.
and activities of the colonial banks and even those of the non-indigenous banks
have been urban oriented-the phenomenon over the years made the banking
services sound strange to those who dwelled in the rural areas. This there were
no banking operations from the grass root of the economy. Although people’s
bank was set up in 1989 to meet the credit need of the rural and urban poor
farmers, artisan, carpenters etc, hence its supply led and heavily depended on
subvention from the federal government for its operation, the economy of loan
has not been very efficient and it is facing problem of undercapitalization as
the result of heavy overheads that outstrip earning which led many people to
high level of poverty. To address this issue the need for the establishment of
various microfinance banks were conceived to solve some of the observed
weaknesses in credit delivery to the grass root levels.
In Nigeria the
idea of microfinance banks are not completely new. Before 2005, community banks
were in place in Nigeria,
operating and performing the function of micro financing. However, microfinance
banks came into existence in Nigeria
in December 2005 following the inauguration of microfinance policy regulatory
and supervisory framework for Nigeria
through the erstwhile President Olusegun Obansanjo administration.
that was inaugurated urged the existing community banks (CBS) to immediately
convert to microfinance banks within a time frame of two years which ended
December 2007. According to the policy framework, the transformation of
community banks to Microfinance Banks was necessary in order to overcome
limitation of the community banks.
Based on the
appraisal of existing microfinance oriented institutions in Nigeria the
justification for conversion of community banks to microfinance banks include
weak institutional capacity, weak capital base, the existence of a huge
un-served market and to promote the economic empowerment of the poor,
employment generation and poverty
reduction, the need for increased savings opportunity. The interest of local
and international communities in micro-financing and utilization of Small and
Medium Enterprises Equity Investment Scheme (SMEEIS) fund among other factors
fact that Abakaliki is an urban city of Ebonyi State which is filled with
various classes of financial institutions that offer financial services to the
agriculturalists, industrialists and businessmen there in, these institutions
have not been able to satisfy the banking needs of urban and rural dwellers,
hence the need for microfinance banks to forward their work operation and
further lies on the fact that few of the microfinance banks that exist are
faced with different accounting problems, that tends to hinder the efficient
and effective operation of the microfinance banks. The qualities of services
through what microfinance banks render to their customers always attract
criticism from people that make use of it in their work of life. Some of the
fallibility of working equipment, distressed conditions of some microfinance
banks, lack of infrastructural facilities, lack of trained and experienced
staff, incompetent board and accounting personnel.
of the problem lies in the fact that though microfinance banks were established
to offer specific services, their existence is seriously threatened by poor
objective of this study is to evaluate the opportunities of microfinance banks
thriving in this country Nigeria,
through a sound operational framework which would lead to efficient and
effective operation of microfinance bank.
The specific objectives include the following:
1. To determine the various accounting problems that hinders
the operations of microfinance banks.
2. To determine the effect of accounting problems on the
performance of microfinance banks in Abakaliki metropolis.
3. To determine the effect of accounting problems on the
profitability and confidence reposed on microfinance banks.
4. To determine the effect of accounting problems on
accounting ratios and its profitability performance.
work carringout will try to find answers to the following:
1. To what extent do the various accounting problems hinder
the operations of microfinance banks?
2. To what extent do the various accounting problems affect
the performance of microfinance banks in Abakaliki metropolis?
3. To what extent is the effect of accounting problems on the
profitability and confidence reposed on microfinance banks?
4. To what extent are the effects accounting problems on
accounting ratios and its profitability’s performance?
In order to
ensure proper and successful execution of the study, the following hypothesis
will be experimented or tested.
problems do not hinder the operation of the microfinance banks.
problems hinder the operations of the microfinance banks.
problems do not have effect on the profitability confidence reposed on
problems have effect on the profitability and confidence reposed on
problems do not affect the performance of the microfinance banks.
problems affect the performance of the microfinance banks.
problems do not have effect on the accounting ratios and its profitability
problems have effect on accounting ratios and its profitability performance.
The benefit of
this research work lies on the fact that the establishment of microfinance
banks is a step in the right direction towards economic growth, development and
as well as proper standard of living both to the urban and rural dwellers. More
importantly, this project will make it easy for government, microfinance
managers and their customers to direct their mind to the best way of operating
and managing microfinance banks in Abakaliki metropolis Ebonyi State.
implementation of the finding and recommendation of this work will ameliorate,
if not absolutely eradicates the accounting problems of microfinance bank at
Abakaliki metropolis in Ebonyi
the attitude of the equity holders and the creditors of the microfinance banks
will be boosted by the finding and recommendation of this research.
provide the best way of managing microfinance banks. It will be of great merit
to the research by showing the scope of his knowledge of microfinance banking.
future researchers will stand to benefit from the study, as it will be useful
and helpful to them since it can serve as a reference point.
many factors that limited the successful execution of this research study. Some
of these factors include the following: time, cost, lack of infrastructural
facilities to meet up the business of the bank and other respondents’ phobia.
1. Time Constraint: The execution of this project alongside other school
activities pose a great challenge and this exerted a great deal of hindrance to
2. Cost Constraint: The financial strength of the researcher at the time of
this work was too poor. Walking from one location to another in search of facts
and data collection was a high cost task with regards to the present economic
situation of the state especially in this Abakaliki metropolis Ebonyi State.
3. Lack of
Infrastructural Facilities: It was quite very
difficult to get reliable sources of materials considering the type institution
the research was carried on. As the result of that, it was discovered that the
available literature on microfinance was too poor. Because, people concentrate
more on commercial and the bankers, (CBN). Base on this issue microfinance bank
lacks so many amenities that will attract customers to patronizing their
business. On that note, they cannot boost themselves.
4. Other Respondent
Phobia: Consequent upon the deficiencies of
the most of the microfinance bank staff, they express fear towards answering
question thrown to them to answer which will enable them to provide solution to
the problems or challenges were confronting them. And the researcher found it
very difficult convincing interviewee, as some of the staff was not ready to
release some vital information that will prove the welfare of the microfinance
DEFINITION OF TERMS
1. Banking: It is an agency that were responsible for accepting and
safeguarding money owned by other individuals and entities, and then lending
out this money in order to earn a profit.
2. Unit Banking: The banking system which precludes establishment of
3. MFBN: This stands for micro finance bank in Nigeria.
4. MFI: Micro finance institution is the set up organs of
microfinance bank that were responsible for providing resources to finance
small scale investment of poor individuals or groups.
5. Capital Base: This is the authorized minimum deposit requirement for
establishment of microfinance bank.
6. Metropolis: This is a developed large city 1 part of a geographical
7. UMP: This stand for urban management programme.
8. Management: According to this context, it is treated as a function.
Hence, it is the act of getting things done through the effort of others, such
as man, money, machine and different materials that were needed for boosting
the affair of the bank.
9. Correspondent Banking
Relationship: This is a situation where
the established decree requires the microfinance banks to maintain at least
three correspondent banking relationships with commercial banks nearest to them
for the purpose of clearing their cheques.
10. CBN: This means central bank of Nigeria. It is the bank of all
banks that were responsible for money circulation around the country, which
also equipped microfinance bank differ from deposit money banks in three major
areas since (2005).