OF CONTENTS v
Statement of the Research Problem 3
Aim and Objectives of the Study 4
Scope and Limitations of the Study 5
Research Methodology 6
Sources of Data 7
Significance or Justification of the study 8
Organization of the Study 9
Literature Review 10
Functions of the Various Departments 14
Central Bank and Credit Creation of Commercial Banks 20
Procedures for Creating Credit Facility 22
Reason for Credit creation by the Commercial Banks 24
Credit Management in Commercial Banks 24
Step in Credit Management 25
Principle and Practice guiding Lending at Zenith Banks 25
Credit administration and Securities acceptance to
Bank Plc 27
Brief Historical of The case Study 30
Restatement of the Research Question and Hypothesis 32
Procedure for Processing Collected Data 41
Research Methodology 43
DATA ANALYSIS ANDTESTING OF HYPOTHESIS
A Brief Introduction of the Chapter 44
Presentation and Analysis of Data According
to the Research Question 45
Problems encountered by Zenith Bank of Nigeria Plc
as regard credit created 49
CHAPTER FIVE: SUMMARY,
CONCLUSION AND RECOMMENDATIONS
Conclusion and Major Findings 54
commercial bank can be defined as an institution that accept deposits from
customer and repay cash on demand. It can also be defined as financial
institution that accepts deposits and other valuables from the public for safe
keeping with the sole aim of making profit.
idea of banking system was introduced in Nigeria 1892 with the establishment of
an Africa banking co-operation. Another one was established in 1894 which was
named British West Africa Bank. The British West Africa bank was later changed
to chase merchant bank to become Standard Bank of Nigeria. In 1899, bank of
1917, Nigeria bank comes to existence but later, it was taken over bank of
British West Africa in 1912. In 1917, it was the establishment of Nigeria
first indigenous bank came into existence in 1929, which was named Industrial
and Commercial bank. Also, in 1931 witnessed the establishment of Nigeria
Merchant Bank. Although, it was later closed down due to lack of funds, bad
management coupled with large scale corruption.
the national bank of Nigeria was established on a sound footing but, due to
greater post war activities, the bank was closed down. In addition between two
survived bank which are; Africa Continental Bank (ACB) and Agbomogbe Bank which
is now called Wema Bank Plc.
was a booming era between 1957 and 1952 because eight banks were established
but 1954, seven banks were closed down only Merchant bank survived. It was not
long that the only surviving bank out of the seven that closed down in 1954 had
its license withdrawn by the state government as a result of mismanagement, one
misuse of government fund.
banks in Nigeria were either owned by the state government or. federal
government but this trend did not continue to the policy of privatization and
commercialization embarked upon during Babangida’s Administration in 1989.
banks play very important roles in the allocation of fund to individuals and
business organizations in the society.
of the principal functions of commercial banks is the creation of credit
facilities which is the process of distributing and disbursing of fund to
potential user, at favourable terms and condition and making sure that the
funds are effectively utilized to ensure the anticipation benefit to borrowing
and lending banks.
facilities are being enjoyed by the account holder i.e. individual and business
organization respectively. It can be listed that traditional function of banks
is financial intermediation i.e. their real is concerned with the monetary
aspect of the economy which involve the mobilization of fund from savers
scattered in the society and there are transfer as a credit to investors.
are average business entrepreneurs who could not or were able to raise enough
funds from their trade for expansion purpose or from other sources like through
friends and others.
last result therefore, is to source for fund from the commercial bank which
play little to the plight of the borrower.
1.2 STATEMENT OF THE RESEARCH PROBLEM
commercial banks in credit creation face some difficulties due to high level of
illiteracy, which lead to many losses of funds. There is thus, a continued
deterioration of the cua1ity of risk assets held by them. Commercial banks are
generally the life wire and cornerstone of all economic and any nation and no
economy within this present dispensation can survive without commercial bank.
major factors that led to failure and distress of many commercial banks in
Nigeria of recent is government frequent interventions. Despite the huge and
various policies of the government on credit creation, the Nigeria economy
seems not to have shown any meaningful development in terms of credit
research work is there after embarked upon to address the various problems
associated with credit creation in commercial banks and how those banks can
reduce the incidence of bad debts and poor management of credit facilities. If
this situation is not properly
addressed, the ability of the commercial banks in meeting their customers
financial needs and contribute to economic growth may not be achieved.
1.3 AIMS AND OBJECTIVES OF THE STUDY
aims of this research are to know the purpose of creating credit by the
commercial banks which include the following:
Increasing the purchasing power of
Increasing the volume of money in
It enhances industrial expansions.
It helps a business man in his day to
It helps in development of
It helps in financing both foreign
and home trade.
1.4 SCOPE AND LIMITATION
study will be concerned with the procedure of creating credit facilities, the
administration and problems encountered by commercial bank on credit creation
and also with collection procedure.
Bank Plc as a case study, the bank was established in 1917 and since its
establishment in 1917, the bank has stood out strongly as a resilient institution
which has served as variable in the financial intermediation process in Nigeria
Financial System. So, Zenith Bank was visited to collect the necessary material
and interview a cross section of their customers.
cost of writing material aid other stationeries are also one of the constraints,
facing the researcher.
limitation was sufficient for collection of data in writing the project work
and combining it with academic work. Also the, reluctance of some respondents
to let out certain “secret’ about the organization is reason for limitation to
1.5 RESEARCH METHODOLOGY
methodology is processes of finding out a solution to a problem through a
research work problems are identified and recommendations are suggested.
to Osuala (1982) ‘Research is the process of arriving at dependable solution to
problems through the planned and systematic collection analysis, and
interpretation of data”.
is information often in numerical form which has been collected for statistical
purpose. In this study, the word data is used to refer to fact, figures or
pieces of information pertaining to Zenith Bank of Nigeria Plc.
1.6 SOURCES OF DATA
basic sources of data employed in carrying out the research work are both from
primary and secondary data model to achieve the objectives of the study.
(i) The Primary Data: This consists of data
collected by the researcher through oral interview with the staff members of
credit creation department of Zenith bank plc, Unity Ilorin branch. Personal
interview is one of the primary data collection techniques used in research
Interview, enables direct contact
between the researcher and the respondents.
(ii) The Secondary Data: This is the main
source of data collected for the purpose of the study. This include the review
of the amount report at Zenith Bank of Nigeria, Plc.
secondary data shows the numbers of credit created per annual, this was
collected from the credit creation department of Zenith Bank Plc, Ilorin Unity
branch. It shows a general upward increase in the number of numbers of credit
1.7 SIGNIFICANT OR JUSTIFICATION OF THE STUDY
significant of this study is to examine the impact of credit management. It
intends to show the risk of return relationship that gives services through
credit creation. This study will highlight the purpose of various types of
credit which the commercial bank gives. Basically, through this study
prospective credit user will understand the types of credit which commercials
Bank of Plc, will examine with a view to provide way by which bad debts crisis
can be minimized and lending structure strengthening and consequently show the
macro-economic implication associated with credit creation management in
recommendation of this study will be of immerse advantage to the banking
industry in particular and the Nigeria economy as a whole. This study may also
be referred to in the nearest future by researchers who may be willing to go
into related study in which it can be used as a source in the literature
1.8 ORGANIZATION OF THE STUDY
simply gives the use of a clue to know how the researcher report will be
arranged for easy and proper organization; the research will be segmented into
five chapters as follows:
one contains the background of the study, statement of the problem,
justification of the study, scope of the study, research methodology, source of
data and organization of the study.
two centers on related Literature having direct bearing to the study by
different authors. This will be reviewed with emphasis on theoretical
background of the study and the state of knowledge and research on the topic.
three which is the methodology, focuses on the data collected and statistical
tool used in analyzing the data.
four presents the result of this study based on the result, the test of
hypothesis and the interpretation. It also reveals the analysis of data
five contains the summary of. the work and concludes this study and make
recommendations for further research.