CREDIT CREATION AND MANAGEMENT IN NIGERIA COMMERCIAL BANKS
The topic of this project is credit creation and management in Nigerian commercial books. The purpose of the study is to examine the impact of policies issued or introduced into the banking system.
The research outline covered the following points, revenue generation as a principal objective of bank lending, inefficient management of loan portfolio a fundamental problem of distressed banks. Loan/deposit ratio as it affects’ liquidity position of banks and the impact of prudential guideline.
Questionnaire was use in data collection using the random sampling method. The chi-square statistic was use in testing the hypothesis.
The finding were that level classified loans as bad or doubtful is still height though prudential guidelines reduce the profit of banks’ it increased value of the banks assets.
The recommendation is for the banks have an effective and efficient loan monitoring and recovery unit in place.
1.1 BACKGROUND OF THE STUDY
Banking is essentially an international business, especially not that financial marketing in many countries are being internalized.
In modern economics is a distinction between the surplus and economic units and the deficit economic units’, consequently; there is a separation of savings’ and investment mechanism. This has made the existence of financial institutions’ whose jobs include the transfer of funds from savers (surplus) unit and investors (deficit) units. One of such institution is the commercial bank.
The intermediating role of the banks places them in a position of ‘Trustees’ of the savings of the surplus economic development. The techniques’ employed by bankers in this intermediating functions provide them perfect knowledge of determining the outcome of lending from such funds as well as ensuring that the funds will be allocated to investments which the probability of full repayment is well ascertained. However, in practice, the reverse has always been the case. Almost all lending decisions are made under condition of uncertainty, the risks and uncertainty associated with lending decisions and the cost of mobilizing fund or deposits used in such lending are so high that the concept of cost benefit and risks analysis need be employed by lending bankers in order to facilitate sound decision making and judgment.