project work was written on the Impact of Inflation on Bad Debts In Nigerian
an organization is an integrated system of activities in achieving some aims or
objectives, it is therefore necessary to involve some plans, processes for the
effectiveness and efficiency of the Banking Industry.
The sample of
80 respondents are to be used and the method of sample will be random sampling.
study will be carefully planed to look into the Impact of Inflation on Bad Debts In
Nigerian Banking Industry. (A Case Study of Union Bank of Nigeria plc Ilorin Branch.)
one contain introduction, background of the study, statement of the study, the
need for the problem , the scope of the study, the signifianbce of the study,
the objective of the study, and definition of the terms.
Two contain, literature review, Review on Inflation and bad debts, bank credit,
causes of bad debts, debt recovery, Advantage and disadvantage of inflation,
causes of inflation, effect of inflation, control of inflation.
three contain, Research Methodology, Historical Background of the Banking
Industry, method of Data collection, the effect of inflation on bad debt in
Banking Industry, Growth and Development of Band debt.
four contains, Data presentation, Analysis of data and Interpretation of data.
five contains summary, conclusion, recommendation, and bibliography.
TABLE OF CONTENT
1.1 Background of
1.2 Statement of the
1.3 The need for the
1.4 The scope of the
1.5 The significance
of the study
1.6 Objective of the
1.7 Definition of
2.1 Review on
inflation and bad debt
2.2 Bank credit
2.3 Causes of bad
2.4 Debt recovery
2.5 Advantage and
disadvantage of inflation
2.6 Causes of
2.7 Effect of
2.8 Control of
background of union bank
3.2 Method of data
3.3 The effect of
inflation on bad debt in union bank
3.4 Growth and
development of bad debt
4.1 Analysis of data
debts are usually associated with the function of commercial banks and the
incidence of bad debt remain as told as the essential function itself.
Commercial banks like other business entities have one objective of being in
business maximize their profit since banking is service industry.
Commercial bank also strive to give
efficient service to their customer at all time to make profit and remain in
Therefore, commercial banks most learn
in other to earn interest, which provides the revenue commercial bank can lend
on loan or over draft to their customers, the choice of facilities repayable
could be agreed installment over a good period of time while an over draft is
short time which could be involving and required to be made good after one
year. An over drat facility is the working capital of the business man.
The lending function of the commercial
bank can only be accomplished if such commercial, bank are in a position to
collect deposit from other lending and the size and mode of lending loan an
advice constitute a greater proportion of credit available in the economy,
lending therefore, helps to satisfied the legitimate credit needs of the
society. Credit like money finds its main function in the production and
service in facilitating the exchange of good credit has also help to make possible
modern like scale production and wide spread division of labour.
Because of the direct impact lending can
have any economy, government all over the world usually integrate the
activities of banks in to policy formulation. The commercial banks intermediation
ruled in the economy is highlighted in the deposit creation lending of those
banks. While the commercial banks collect deposit from those who have surplus
funds, the part give out part of this funds to those who required more funds to
expand an existing business or established in a new one.
The depositor’s relationship with their
banks is base mainly on their mutual trust while it is known from experience
that all depositors can not call for their deposit at the same time commercial
bank must always ensure that these are always a find to meet depositors
In addition to the profitability and
efficiency objective of commercial bank therefore the needs for sounds
liquidity at all time is always emphasized.
The liquidity object of commercial banks
compelled most commercial to lend on short term
basis since most of their deposit is kept over a short period of time
the depositor’s fund, which form the lenders working capital required prudent
management if the working capital is to grow and not depleted. This position
explain the reason why commercial banks take time to study business requesting
for financial assistance.
The bank manger and other officers
appointed to give surplus of these credit appraise each proposes thoroughly
ensuring their can on of lending which improved purpose and the amount required
the sectorial classification of the loan required, the proprietors stake in the
business and the security offered.
Experience has shown however that money
business that were appraised and which appeared attractive in the past
continual of fall in recent years Nigeria now funds herself.
Many business that appeared initially
attractive failed because they can no longer obtain raw materials with which to
produce some failed because they can not raise enough local currency to produce
spare parts for their grounded machine while some find the current cost of
capital too much to bear such business try to avoid the repayment of both
interest and principal debt against them by switching to other banks.
Business failures have for reaching
effect on the ability of borrowers of banks fund to repaid their debts. The
resultant effects if these failure is the ever growing incidence of bad debts
in Nigerian banks for example union bank which is the one of three leading
banks in the country has had an unpleasant share of the burden of those debts.
OF THE STUDY
project work is made up of five chapters in which chapter one comprising
introduction, background of the study, statement of the problem the need for
the problem, the scope of the study, the significance of the study, objective
of the study, definition of terms.
The second chapter deals with review on
inflation and bad debts bank credit, causes of bad debt, debts recovery,
advantages and disadvantages of inflation causes, effects and control of
The third chapters deal with research
methodology, historical back ground of the case study, method of data
collection the effect of inflation on bad debts in union bank growth and
development of bad debts.
Chapter four contains data presentation
analysis of data and interpretation of data.
Chapter five discusses summary
recommendation and conclusion.
OF THE PROBLEM
impact of inflation on bad debts, which cut across all share of business
society in Nigeria.
Recently, the incidence of inflation has been the focused of government
attention. In this project attempt will be made to analyse inflation causes and
effect of the growth of the backing system in particular and the overall
development and likely solution with a view to minimize it frequent occurrence
detail of this may be found in next chapter.
NEED FOR THE PROBLEM
need for this project study has been amplified by the economic depression in
which Nigeria has found here self in the past fourteen years the depression has
brought with its economic problems which include huge foreign and interest
debts high unemployment, severe raw materials and severe parts shortages, high
rate of inflation and rapidly declining per capital income.
The economics twist of fate of Nigeria that
proper her departure from can era of economic boom in the mid seventies and
eighties to a period of prolonged depression is first and foremost to the sharp
decline in revenue derivable from crude oil.
The depression economy can also be
attributed to economic mismanagement by Nigeria leaders misplaced priorities,
neglect of agriculture which can another veritable source of foreign exchange
earnings, general depression in the world economy, high level of deficits
spending by government and excessive imports which are not at par with exports
consequent upon the dull economic climate therefore, may loans and overdrafts
facilities granted by commercial banks to individuals and corporate bodies the
past are no longer being regularly services may of the facilities which are
totally bad are now abandoned.
The growing brand of bad debt in the
book of commercial banks is now a cause for concern to leading banker’s
failures to pay an existing debt limits the credit creation capability of banks
and this limitation will affect economic production the volume of which is
always influence by the availability of credit.
When production capacity can not be
enlarged, new employment cannot be credited, when plant are under utilized
labour gets retivialized or totally discarded.
There is need therefore, to look at the
correction between the prevailing economical depression and the increasing
failure rate of banking lending which in affect can affects banks profitability
and jeopardize their shareholders return on investment.
1.4 SCOPE AND LIMITATION OF THE STUDY
would be very unrealistic have been gathered in the process of this study this
is so because the information gathered is limited to those available by the
respondent, financial experts analysts, economist and accountant such
information provided may not be tree bases, hence a source of inadequacy of
Information that relate to inflation on
bad debt is kept confidential, regardless of the purpose for which they are
intended. Hence, a general a pathy and reluctance to provide answer to the
question asked willingly and truth fully.
SIGNIFICANT OF THE STUDY
significance of the study stems from the assumption that the attack on the
impact of inflation on bad debt was originally incurred by business promoters
to finance the acquisition of one thing or the other. The purpose could be an
item of fixed asset, it could also be for the purpose of financial working
capital what ever the case may be, inflation as it is the case in the Nigeria
economy has an unfolding impact of the performance of fixed asset financed by
back loan and the adequacy or other wise of the firm’s working capital.
OF THE STUDY
of the main objectives of the study is to analyze the impact of the inflation
on bad debts in union Bank through effective debt management. It is also the
objective of this study to suggest ways and means by which loans liquencies can
be drastically reduced through effective lending controls.
To be able to achieve these objectives,
it will be necessary to ascertain the means of inflation and to show it affect
bad debts and their financial intermediation role to the economy.
Although, the study, as union bank of
Nigeria Plc in view the project work is to serve as a relevant working paper
and guide to other commercial bank in Nigeria.
is the persistent rise in general level of goods and services. It is also a
period in which there is a rise in the general level of price measured by price
prices are rising slowly
inflation occurs when price start rising at double prices
in inflation is a period of extra-ordinary rises in price
is the money that can no be recovered