LOAN ADMINISTRATION AND MANAGEMENT IN SELECTED THREE NIGERIAN BANKS

ABSTRACT
INTRODUCTION
Every nation both developed and developing economies requires money. Productivity which is the hallmark of all economy is anchored on the availability of required fund. Fund which stimulates production in the economy is managed by banks through their loan administration and management; which must be liberal enough to produce the required level of encouragement to both entrepreneurs and government. Moha (2006:110), said, for any developing country to escape the vicious circle of poverty, there has to be foresight and insight into the funding of entrepreneurial activities to stimulate production in all sectors of its economy. One major constraint to production in the sub-Saharan Africa, as opined by Adeniyi (2006:62) is poor funding. Leadership be said, is the rallying point of all activities. This vital point (leadership) the Central Bank of Nigeria recently took up headlong to make commercial banks assume their proper place in the funding of production activities in the economy. It means not only profit to the banks, but also creation of new jobs and increased capacity utilization. Bank loan have to affect different sectors of the economy, viz; Agriculture, Commerce, Mining, Education, Industry and different services which yawn for holistic development. Soludo (2006:08), lent his support to the above when he said, the heartbeat of any nation is its diversified and effective production sustained economy. It is a bull-wave against any external infiltration. Loan policy meaningfully framed and religiously implemented is all that is needed to transform Nigeria. This study has much impact on all and sundry. Development of the society, very much lies on investment put into it. By virtue of loans and advances, a society can be made vibrant and the economy monetized to accommodate all; that is, the ordinary man can be uplifted to investment levels.

METHODOLOGY
The research has a survey design, which evaluated the extent to which loan administration and management is being carried in the banks currently and the historical design appreciates what had been the extent of loan administration and management in the past. Both designs are used to make deductions to the better credit administration management in the banks. In the pilot study carried out on both senior and junior staff of First bank and Intercontinental Banks, 20 questions were served, asking whether they imbibed the culture of performance management. Out of the 20, 16 affirmed, representing 80% of success in the population (P) while 4

(Q)  dissented, representing 20% of failure. P and Q are dichotomic: P + Q = 1. A sample size of 397 was determined using Yamens method from a population size of 45678. With status of staff as basis, stratified random sampling was also used. Questionnaire was analyzed using percentages, mean etc. Hypotheses tested at 0.05 level of significance using Z-test.

RESULT
Several observations are revealed in this study, but a few shall be named here as by way of summary. Loan administration bears significant relationship with profitability in banks as confirmed by the Z-test value of 33.20 against critical value of 1.96. There is significant variation in the effectiveness of loan management among banks in Nigeria confirmed by the Z-test value of 8.66 as against critical value of 1.96. Loan beneficiaries are duly assessed by business connections. Loan credit officers of banks are not always enriched with special seminars. Loan default or misuse of loan fund by borrowers is singularly and severally caused by: inadequate credit/loan analysis, loan diversion, outright fraud by beneficiary, collision with bank officials, change of government policies, general economic downturn. Manipulation of interest rates helps failure of loans. Most applicants for loan (especially industry and agriculture) seek for long term while banks are willing to settle for short term.

CHAPTER ONE
INTRODUCTION
1.1      BACKGROUND OF THE STUDY
Nigeria as a developing nation is in dire need of a vibrant economy anchored on productivity, which is in turn anchored on liberal loan management and administration of Nigerian banks. According to Moha (2006:110), for any developing country to escape the vicious circle of poverty, there has to be foresight and insight into the funding of entrepreneurial activities to stimulate production in all sectors of the economy. This function has to be undertaken by the banks through effective and profitable loan administration and management.


According to Lopez (2005:210), Japan was one country known for making fake products. These products, he noted, have been greatly improved as a result of liberal loans management and administration from banks. In his own submission, Adeniyi (2006:62), said one major constrain to production in the Sub-Saharan Africa, is the poor funding. Leadership, he said, is the rallying point of all activities, which is far from policies. For any economy to be transformed, there must be efficient loan administration.

Accordingly, Moha (2006:181), opined that bank is the center point of macro economic nexus because all productive capacities in any economy hinge on its loan administration and management. Bank loans which activate the economy are those that are channeled to productive ends.

Ogwuma (1996:11), noted that the bane of Nigeria’s dwindling economy is excessive dependence on imported goods which in itself is a clear evidence of a castrated economy that cannot sustain itself. Soludo (2006:08), in his submission noted that the heartbeat of any nation is its diversified and effective production sustained economy. It is a bull-wave against external infiltration. He added that loan policy meaningfully framed and religiously implemented, is all that is needed to transform Nigeria.


Successful lending has direct effect on economic growth and development on the economy. It means that not only profit to the bank, but also creation of new investment opportunities, creation of new jobs and increase of capacity utilization. Sambo (2005:93), stated that bank loans have to affect different sectors of the economy, viz, agriculture, commerce, mining, industry and different services, which yawn for holistic development.

DEFINITION
Loan administration means the range of activities involved in extending a credit facility to a bank loan applicant i.e. the borrower.

Loan management is the lending officer’s responsibility to supervise, monitor and keeping close contact with the borrower in his financial activities; culminating into planned visits, securing the borrower’s periodic financial statements and reviewing requests for additional funds (Roussakis: 1977.5)

1.2      STATEMENT OF THE PROBLEM
The growth of any nation follows from the state of its economy. A vibrant economy implies diversified investments which generate employment opportunities. Macro economic environment is hinged on the state of the banking sector. The government has a lot to control in the banking sector in order to re-direct the economy to vibrancy through efficient loan policy and administration. It is expected that the loan policy and administration should encourage investment in all sectors of the economy. 

Over the years, government has been controlling the loan policies of banks to effect desired changes in the economy. More often than not, these manipulations do not achieve maximum targets. Also credit policies fail to meet the targets. Many borrowers often do not apply the funds judiciously as stipulated in the loan policy. This has a deterring effect on subsequent loan administration and management of banks. Sometimes, banks fail to recover the face value of loans as well as the interests. This drastically affects further loan administration. Some loan policies may not be in the interest of the nation at large, in which case, the Central Bank may be forced to directly effect policy changes.....

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Item Type: Project Material  |  Attribute: 155 pages  |  Chapters: 1-5
Format: MS Word  |  Price: N3,000  |  Delivery: Within 30Mins.
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