THE ROLE OF FINANCIAL INSTITUTION IN THE MANAGEMENT OF LOAN SYNDICATION IN NIGERIA ECONOMY.

CHAPTER ONE

INTRODUCTION

Financial institution occupy a vital position and play a land role in the economy of the nation. Their major purposes are proper mobilization of fund as well as provision of capital for industrial development which is aimed at enhancing economic- growth and development in the early year o banking operation in Nigeria, bank performed their intermediary functious by giving loan mainly on individual basic (ie separately) but as the country entered the threshold of development and more investment opportunities opened up, industrialist started demanding large sum of money which is provide by bank on medium or long term basis. However, baking is a highly regulated industry the world over with restrictive monetary and credit guideline in long growth and reserve requirement, sector of the economy and excess liquidity mop up through the assurance of stabilation securities to the bank to mention few due to these restrictions, it is difficult for a bank to meet up with the huge loan demanded for customers. Also, it is well known that lending is not a risk free and that bank prefer to spread their risk with others in the banking industry.

1.1  BACKGROUND OF THE STUDY

Against this background, banks came to get her performing what is known as consortium to advance funds is called loan syndication and is sometimes called “consortum” lending can be define as the agreement between two or more lending institution to provide a borrower with credit facility utilizing common loan documentation. Loan syndication is now being practiced in Nigeria starting from 1960’s when a constrium of commercial banks and acceptance houses discounted trade bills for marketing boards under the produced bills finance scheme formalized loan syndication came into being during the oil boom of the jobs when there was need for adequate capital of finance, the industrialization programmes. During this period, few merchant banks had been incorporated. Loan syndication has assumed international dimension because it need to provide adequate capital to finance the fast growing of the world economical international syndicated credit is managed and underwritten by one or more finance institution normally from a location other than the domicile of the borrower lenders from different countries could provide the borrower with access from their countries or to move than its own currency from other contracts of domide.