AN APPRAISAL OF THE LENDING AND CREDIT MANAGEMENT POLICIES OF A TYPICAL MONEY-DEPOSIT BANK (THE UNION BANK OF NIGERIA PLC)

AN APPRAISAL OF THE LENDING AND CREDIT MANAGEMENT POLICIES OF A TYPICAL MONEY-DEPOSIT BANK (THE UNION BANK OF NIGERIA PLC)

CHAPTER ONE/INTRODUCTION

1.1   BACKGROUND OF THE STUDY

In a modern economy, there is distinction between the surplus economic units and the deficit economic units and in consequence a separation of the savings investment mechanism. This has necessitated the existence of financial institution whose job include the transfer of found from savers to investors. One of such institution is the money deposit banks, the intermediating roles of the money deposit bank place them in a position of trustees of the saving of the widely depressed surplus economy units as well as the determinant of the rate and shade of the economic development .the techniques employed by banker in the intermediary function should provide them with perfect knowledge of the out-come of lending such that funds will be allocated to investments in which the probability of full payment is certain. However, in practice no such tools can be found in the decision of the lending banker.  Virtually all lending decision are made under creditors on uncertainty associated with lending decision, situation are so great that the concept of risk and risk analysis needs to be employed by lending bankers in order to facilitate sound decision making and judgment. This statement implies that if risk are to be objective assessed, lending delicious by the money deposit bank should be base less on quantitative data and more on principle too subjective to proved sound and unbiased judgment. Furthermore the bank depends heavily on historical information as a basis for decision making.

Apparently aware of the inadequacies of his decision base the lending banker has often sought solace in tangible and marketable assets as security giving the impression that lending against such security is an insurance against bad debt. This makes the bankers complacent his loan portfolio. The increasing trend of provision for bad and doubtful debt in most money deposit banks is a major source of concern not only to management but also to the shareholder are becoming more aware of the dangers posed by these debts. Bad depts. destroy of the earning asset of bank such as loan and advance which have been described as the main source of earning and also determines the liquidity and solvency which generate two major problems that profitability and liquidity, has to earn sufficient income to meet its operating cost and to have adequate return on its investment.

1.2 STATEMENT OF THE PROBLEM

The problem for this study is appraised the lending and credit management policies of a typical money depot bank (the union banks of Nigeria plc)with a view of finding the causes, consequence of bad debts in banks. Year after year, banks suffer much from the part of full loan extended which has for one reason or the other proved unrecoverable. Banks lose millions of naira in various bad debts yearly and despite effort by bank management, committee of chief inspector and the banker committee on other hand the wave of bad debt in bank is still on alarming proportion. This is gathered from a combination of literature reviews on the topic.

On the other hand, many banks experienced a lot of bad debts when the new government abandoned the project awarded to the contractors by past government. These contractors borrowed to execute the project awarded to them to them but could not repay the loan, due to government action on ramping the economy thereby abandoning the project. Other experiences were during the time of draught or poor rainfall and pest. These however led to low harvest which did not give the farmers enough time to repay their debt.

Again, experience may arise in respect of lapses on the part of the banks credit officers. For instance, there may be excesses over approved facility, unformatted facilities and expired facilities not renewed on time. In each of these cases the customer may easily deny even owing the bank all or part of the amount. Money deposit banks may be unable to take the risk of lending more but when eventually they do, they would seek the best way they come out of risk with a realistic reward which they are clearly failing to achieve at present.

1.3   BACK GROUND OF THE STUDY

  1. to determine and appraise the lending procedure of banks using union bank of Nigerian plc as a case study with a view to highlighting the effectiveness and adequacy or otherwise the credit management policy of Nigerian banks in reducing the occurrence and consequences of bad debts.
  2. To highlight the rate at which inadequate collateral security provision by borrower increases the incidences of bad debt in Nigerian.
  3. To determine whether fund diversion has any effect on bad debt of money deposit banks in Nigerian.
  4. To ascertain the extent to which government intervention in lending policies of money deposit bank has influenced bad debts in Nigerian money deposit banks.
  5. to highlight the extent to which improper project evaluation influence bad debt of money deposit banks in Nigerian.

1.4   RESEARCH QUESTIONS       

In view of the consequences of bad debt in Nigerian money deposit banks, it is necessary to formulate some research question which will enable the researcher formulate statistical tables for testing hypothesis

  1. Has inadequate collateral security provision by borrower caused bad debt in union bank of Nigerian plc?
  2. Does fund diversion have any effect on bad debt of union bank of Nigeria plc?
  3. To what extent has government intervention in lending policies of money deposit bank influenced bad debt in union bank of Nigerian plc?
  4. To what extent does improper project evaluation influenced bad debt of union bank of Nigeria plc?

 

1.5 RESEARCH HYPOTHESIS

The following hypotheses were as follows.

  1. Ho: inadequate collateral provisions by borrowers does not increase the incidence of bad debt in union bank of Nigeria plc

Hi: inadequate collateral provisions by borrowers increase the incidence of bad debt in union bank of Nigeria.

  1. Ho: fund diversion does not affect bad debt in union bank of Nigeria plc

Hi:        fund diversion affects bad debts in union bank of Nigeria plc.

  1. Ho: government intervention in lending policies of money deposit banks has no influence on union bank of Nigeria plc bad debt.

Hi:    government intervention including policies of money deposit banks has direct influence on union bank of Nigeria plc, bad debt.

  1. Ho: improper project evaluation has no significant relationship with bad debt in union bank of Nigeria plc.

Hi: improper project evaluation has direct relationship with bad debt in union bank of Nigeria plc.

1.6 PURPOSE OF THE STUDY

It is hardly an exaggeration that the difference between the success and the failure in the banking industry is in the effective management of the bank’s loans and advance. Efficient loan management is vital to the protection of assets and the achievements of adequate returns to investment. Though much work abound in the literature of the technique of lending, the methods of securing such lending and the pit alls that await the unwary banker by comparison it appears to be very little in point on the subject of loan management and recovery.

A study of this subject will therefore be a welcome addition to the existing volume of banking literature.

Effective loan management recognized that beyond the application of sound banking principles whenever a loan is made, there is need for urgency in appreciating the point when a loan begins to look doubtful, in arriving at a decision as to the appropriate action and in taking that action. This will enable the bank to at least obtain full payment including accrued interest or at worst to mitigate the capital loss in the face of increased competition among banks, future profits are likely to be harder to come by and since bad debts are a charge against profits, t is appropriate that we review the methods, proportions and margins of lending to bad and doubtful debts.

Hence the significance of this study to bankers will enable them to appreciate an appraisal of their lending and control mechanism now that they are expected to lend under tight monetary conditions. The economy as a whole will benefit from the study because if the level of bad debts is reduced, banks will be left with more profits to enable them make the expected contributions to the development of the economy.

1.7 SCOPE AND LIMITATION OF THE STUDY

In the study of credit management in Nigeria, union bank of Nigeria plc was used for my analysis. All references therefore relate to union bank of Nigeria plc.A  six year period covering 1988 – 1993 will be studied.

The limitations of this study include some of unavoidable constraints and problems encountered in the process. They are as follows:

  1. Finance: the problem of finance was not left out in the course of research to this study. This types of study required adequate money to enable the researcher visit the necessary places for collection of data. Insufficient fund hindered an in depth study of this research since it was financed from meager pocket money of the researcher.
  2. Non availability of records: this is one of the most important limiting factors in the course of the study. This includes the problems of not easily getting the appropriate data due to bureaucracy which hinders the information flow in the country.
  3. Non challant attitude of bank officials: the reluctance of bank officials to reveal information on the need for this study, for fear of breach of duty of secrecy to customers and exposure of banks administrative short comings.
  4. Ignorance of respondent /borrows: most bank customers were semi illiterates and most often it was very difficult to collect adequate data required from them.
  5. Time: since this study is one of the many course offered by the researcher, the researcher was constrained by time to carry out an indent research on the study.

1.8   DEFINITION OF TERMS

Debt: this is what one owes to another person.

Loan: loan is a credit arrangement; a security is pledged and must be repaid with interest over a stipulated period of time.

Overdraft: this is a credit arrangement by banks to their customer to withdraw money over and above what he has in the account.

Default: this means failure to pay one’s debt for credit extended which has fallen due.

Hypothesis: This tentative statement of conclusion. It is a statement of claim which is to be proved right or wrong having been confirmed with facts.

Ho: null hypothesis: the hypothesis that is being tested.

Hi: alternative hypothesis: the hypothesis that will be accepted if the null hypothesis is rejected.

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Sep 12

IMPACT OF INTERNAL CONTROL SYSTEM ON PROFIT PERFORMANCE OF COMMERCIAL BANKS

ABSTRACT

This study primarily aims at finding out the impact of internal control system on the profit performance of commercial banks in Nigeria with an empirical study on Orient Bank of Nig. Plc and United Bank of Africa Plc.

Internal control systems impact on commercial banks might be as a result of non-adherence to the system or stringent, inflexible adherence on the system. These two extremes will invariably have adverse effect on the profit performance of the commercial banks and as such the management will always try to strike a balance or trade-off for their profit maximization.

The paper therefore tends to evaluate the extent of adherence to internal control system, its impact on the profit performance of OBN PLC and UBA PLC and control strategies to be adopted to revitalize or moderate the system.

This project is divided into five (5) chapters –

Chapter One: This is the introductory chapter that provides information about internal control system. This chapter gives insight of the problem identification, objectives and significant of study, hypothesis to be tested and scope and limitations of the study.

Chapter Two: This is the Literature Review which makes good references to people that carried out the studies on internal control. It includes the importance and qualities of good internal control and also qualities expected of bank staff. Chapter Three: This includes Research design, scope and methodology.

Chapter Four: This involves presentation and analysis of data collected.

Chapter Five: This includes the Summary, Recommendation and Conclusions

 

CHAPTER ONE

INTRODUCTION ANALYSIS

 

1.1       GENERAL INTRODUCTION

Internal control is the set of accounting and administrative control and practices that helps managers in operating their organization more effectively and efficiently. It ensures that both the accounting and administrative activities are in order with the laid down procedures, standards, and statutory requirements. It also detects deviation if any and calls for immediate corrective measure. In any profit oriented organization, the objective of management is to maximize profit, and internal control is a technique that can be of assistance in attaining such maximizations.

Banking is a venture undertaken primarily for profit and whose operation should at  least include taking money on account and releasing of such money wholly or partly on demand or authority of the depositor.

An important object of banking particularly in the developing countries is the promotion of economic development. In pursuance of this economic development as well as banks’ profitability, banks tends to improve on their services by devising methods of sound and effective system of internal control.

This study therefore, intends to evaluate how the internal control policies have affected the profit performance of commercial banks with particular reference to Orient Bank of Nigeria Plc and United Bank for Africa Plc.

 

 

 

1.2     PROBLEM IDENTIFICATION

There have been incessant cases and stories been told about high frequency of fraud, embezzlement, overcharging, manipulation, missing files and ledger cards and other banking malpractices in banks today, with the management and shareholders not knowing how to handle the adverse situation.

The Orient Bank of Nigeria (OBN) Plc and United Bank of Africa (UBA) Plc were not left out in these increase in crime – wave problems and banking malpractices, despite the existence of inter-control and devices adopted to detect fraud. This situation has culminated in the lack of confidence by the staff, shareholders and customer over the growth and profitability of the banks.

Moreso, with the proliferation of banks and also the increase in rural banking, with commercial bank’s branches, the volume of accounting records has drastically increased, thereby necessitating the appraisal of the adequacy and reliability of records, and overall efficiency of operations.

Furthermore, with the public interest in the “truth and fairness” of financial statements – profit and loss account and balance sheet, whose stratum of reliable is on the internal control system, the research is therefore aimed at investigating the extent of adherence to the internal control system and its impact on the profit performance of the banks.

 

  • STATEMENT OF OBJECTIVE

 

The objective of this research include among others the following:

  1. To identify and appraise the internal control designed, installed and operated by the management of OBN and UBA with a view to assessing its impact on profit performance.
  2. To examine the extent of adherence or compliance to the policies, standards and procedures by the members of the staff in order to recommend operating improvement.
  3. To identify possible deficiencies and weaknesses of the existing internal control to find means of ameliorating them.
  4. To review the profit performance of the banks OBN and UBA and relate it to their internal control.
  5. To critically analyze the effectiveness, adequacy and applicability of the various internal control.
  6. To offer useful recommendation to proper design, installation and operation of an adequate and good internal control system.

 

1.4       SIGNIFICANT OF STUDY

The research is intended to define the level of internal control and its impact on profitability of OBN and UBA Plc. It will be of great importance to the banking staff especially the managers and officers whose interest are geared towards the enhancement of the chances of bank profitability; in serving as a guide in the performance of their duties. It will assess the effect of fraud, manipulations, errors, improper authorization, dishonesty, inadequate accounting records etc on profitability in view of the existing internal control system.

A comprehensive knowledge of system of internal control will form a foundation on which the auditor’s report on “true and fair view” final account is based and as such, the study will be of immense values to the practicing Accountants, Auditors, Lawyers, shareholder and other interested parties for acceptance and reliance of financial statement.

Furthermore, it will include more research in the improvement of banking services in Nigeria for the interest of the shareholders, customers and government.

Finally, the study will provide the basis for recommendation to the management of the best approach to designing, installing and operating an improved system of internal control aimed at promoting operational efficiency and eliminating or at least minimizing waste.

 

1.5       FORMULATION OF HYPOTHESIS

  1. The management of OBN and UBA Plc designed and installed 50% good system of internal control which their policies, standards and procedures are adhered to by the members of the staff.
  2. The system of internal control adopted by UBA Plc enhances its profit performance than the system adopted by OBN Plc.
  3. The present internal control systems adopted by the banks are effective and adequately operated.
  4. The existing internal control systems of the banks enhance their profit performance.

1.5       METHOD OF TESTING HYPOTHESIS

 

HYPOTHESIS I: – This hypothesis will be analyzed based on the respondents response to the Strategic Position and Action Evaluation (SPACE) of features of a good internal control system in OBN and UBA Plc. The rating ranges from 1 to 4, representing weak to very strong. The SPACE average will be used.

Average responses to question I of the general questionnaire taken according to department will be subjected to single proportion testing using the following test statistics:

Z          =           X –    npo

Npo   (L – po )

Where

n          =          sample size

x          =          number of responses in favour

po        =          proportion to be tested

The level of significance        will be 5% for the testing to give a critical value of z<I.64 (.one tailed test)

See appendix I for SPACE.

It will also be analyzed based on the following:

  1. Responses to questions of the general questionnaire will be tested to obtain the part played by the management in the design and installation of internal control and ensuring that the policies standards and procedures are adhered to.
  2. Oral interview will be conducted on the bank officials at their convenience for elaborate discussion on the extent of staff adherence to the installed system. There will be proper investigation of documents and records to find out the reliability of the oral responses.

 

HYPOTHESIS II: This hypothesis will be tested based on the comparative analysis of the ages and financial statement of the Bank.

It will also be analyzed from the responses to the relevant areas covered by the questionnaire. Such areas include electronic data processing, purchasing, cash receipts and disbursement, petty cash, payroll and fix assets.

 

HYPOTHESIS III: This hypothesis will be tested with the following;

  1. Oral interview will be conducted on the employees to find out the extent of their adherence to the procedural manual of the banks.
  2. Further information will be elicited from responses to question 4,5 and 7 of the general questionnaires.
  3. Employees will be observed during working hours (8am – 1.30pm) to ascertain the processes involved in their operations mainly withdrawals and deposits of money in the banks and also to detect errors and flaws.
  4. A thorough study on authorization will be made to know whether employees conform to effective and adequate operation.

 

HYPOTHESIS IV: In analyzing this hypothesis, the following test will be carried out.

  1. Data collected from the general questionnaire will be tested and also oral interview conducted. A five year financial statement will be analyzed and each year’s profit compared with the proceeding years to ascertain the direction of profit performance. This will then be matched with the degree of adherence to internal control features within these periods.

 

1.6     SCOPE/LIMITATIONS OF STUDY

This study covered the internal control systems adopted by various commercial banks in Nigeria. The population sample was taken from only two banks OBN and UBA and their branches in Enugu State. Other parts of the country were not covered, though empirically generalized view was made of them.

The study was restricted to two major areas of internal centre. They are:

  1. Administrative control
  2. Accounting and financial control (internal checks, internal audition and other financial system of control). This was done based on a comprehensive understanding of the principles of good internal control.

However, the study encountered a lot of constraints as regards time, money and sourcing of information. Effort geared towards obtaining adequate information proved abortive due to the uncooperative attitude of some interviewed staff. Besides, no bank likes the public to know the deficiencies in its internal control as the confidence reposed on it by the public might be lost.          But, irrespective of these limitations, an in-depth study was still carried out.

 

1.7     DEFINITION OF TERMS

The researcher at this point believes that some key words and terms that will be encountered while reading this research work will be defined.

  1. Internal Control System: This is the whole system of controls, financial and otherwise established by the management in order to carry on the business of the enterprises in orderly and efficient manner, ensure adherence to management policies, safeguard the assistance and secure as far as possible the complements and accuracy of the records.
  2. Internal Accounting/Financial Control: Measures that relate to protection of assets and to the reliability of accounting information and financial statements.
  3. Internal Administrative Control: A sub category of internal controls which reply principally to operational efficiency and compliance with company policy and which do not bear directly on the dependability of financial statement.
  4. Cheques: A cheque is a bill of exchange drawn on a banker, payable on demand” (Bill of exchange ordinance 1917 73).
  5. Embezzlement: Theft by a person of assets entrusted to him or her
  6. Internal Auditing: An activity carried on in some organization by a professional staff to investigate and evaluate the system of internal control on a year round basis. Also to evaluate the efficiency of individual department within the organization.
  7. Documentation: This includes all the charts, firms, tapes, reports and other business papers that guide and describe the working of a company’s system of accounting and internal control,
  8. Fraud: Dishonest acts intended to deceive, often involving the theft of assets and falsification of accounting records and financial statements.
  9. Organization chart: A diagram showing organizational lines of authority and responsibility with emphasis on separation of function.
  10. Irregularities: Acts by individuals in an organization aimed at perpetrating fraud or embezzlement.
  11. Fidelity bond: A form of insurance contract is which a bonding company agrees to reimburse an employer for losses caused by theft by bonded employees.
  12. Independent Auditor: Professional level accountants that examine the books and records of companies and express opinions the accounting records in the interest of third parties.
  13. Effectiveness: Attainment of a predetermined goal.
  14. Efficiency: Relationship between inputs and outputs
  15. Collusion: Where two or more persons conspire to commit an illegal act such as fraud and embezzlement.

16        Illegal Acts: Actions that are not in conformity with prescribed company practices that are capable of leading to fraud.

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Aug 06

AN ANALYSIS OF THE IMPEDIMENTS TO STRATEGIC MANAGEMENT IN THE NIGERIAN BANKING INDUSTRY

AN ANALYSIS OF THE IMPEDIMENTS TO STRATEGIC MANAGEMENT IN THE NIGERIAN BANKING INDUSTRY

 

ABSTRACT

It is no gain saying that Nigerian banking and financial system has undergone remarkable changes over the years, in terms of the number of institutions, ownership structure, as well as the scale of operations driven largely by the deregulation of the financial sector in line with the global trend. The aim of the study is to analyze impediments, determine and ascertain the causes of resistance to changes in strategic management practices by bank management as well as proffer solutions on eliminating such impediments to strategic management practices in Nigerian banking sector. In this study, descriptive statistics was used to describe quality and quantity raw data on the impediments to strategic management in the Nigerian banking industry. It is important to note that a thorough understanding of descriptive statistics is essential for effective use of all normative and cause-and-effect statistical techniques, including hypothesis testing, correlation, and regression analysis.  In conclusion, the result of the analysis ‘showed that banks have really developed new ideas to contend with impediments to strategic management  through new technology, new products and services, competent human resources and strategic branch locations to enhance performance and profitability.

TABLE OF CONTENTS 

Title Page                                                                                          i

Certification                                                                                      ii

Dedication                                                                                        iii

Acknowledgement                                                                             iv

Abstract                                                                                             v

List of Tables

 

CHAPTER ONE – INTRODUCTION

1.1 Background of the Study                                                            1

1.2 Introduction of Banking System in Nigeria                                 4

1.3 Statement of the Problem                                                            7

1.4 Objectives of the Study                                                               9

1.5 Research Questions                                                                     9

1.6 Hypothesis of the study                                                              10

1.7 Scope of the Study                                                                      10

1.8 Significance of the Study                                                            11

References                                                                                   12

 

CHAPTER TWO – REVIEW OF RELATED LITERATURE

2.1 Theoretical Review                                                                     14

2.2 Empirical literature                                                                     29

References                                                                                   39

 

 

CHAPTER THREE – METHODOLOGY OF THE RESEARCH

3.1 Research Design                                                                          41

3.2 Sources of Data                                                                          41

3.3 Population/Sample Derivation                                                    42

3.4 Instrument for Data Analysis                                                     44

3.5 Method of Data Analysis                                                            45

References                                                                                  46

 

CHAPTER FOUR – DATA/RESULT ANALYSIS

4.1 Data Presentation and Interpretation                                          47

4.2 Implications of Results/Analysis                                                48

References                                                                                         60

 

CHAPTER FIVE – SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Summary                                                                                    61

5.2 Conclusion                                                                                  61

5.3 Recommendations                                                                       62

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Aug 06

THE IMPACT OF MICROFINANCE ON ENTEREPRENEURIAL DEVELOPMENT (CASE STUDY OF UMUAHIA ABIA STATE)

ABSTRACT

 

This work investigated the relationship between micro finance and entrepreneurial development aimed at reducing poverty in the economy.

The primary method of data collected from small and medium enterprise were used for their study. In the analysis table and simple percentage were used.

Major findings of this work reveals that there is a strong positive relationship between micro financing and entrepreneurial development further findings shows that provision of long term loans and equity capital by micro finance bank for enterprise are factors that militated against micro finance in the economy.

This work recommended that guidelines for micro finance institutions to finance SME’s need to be flexible to accommodate the SME’s in terms of granting them long-term  loans and quality capital participation.

This will be of immense benefit to SME’s micro finance banks  authority and the students of body and firms who may be interested in further research on this topic.

 

 

 

 

 

 

 

 

 

 

 

 

 

CHAPTER ONE

INTRODUCTION

  • BACKGROUND OF THE STUDY

The issue of sustainable development in the third world countries like Nigeria has been a growing concern to both the government and the private sector. The huge amount of money the government  has been investing on this platform over the years have not yielded any meaningful result. Poverty is a characteristic OF Nigeria households or individuals. It has been realized in the recent years that there are limits to which government can single promote development. Most of the traditional functions being carried out by the government in most countries ranging from the provision of economic development are becoming increasingly difficult to accomplish. Nigeria as an nation has her own administration, corruption, infrastructural decay, insecurity of lives and properties, unstable macroeconomic regime and unpredictable fiscal policies by successive administration (Fasug, 2006).

 

Thus, both the public and the private sector of the economy and every segment of the society process of the country. It is on this basis that government begins to engage in privatization policy with the view of allowing the private sector to participate in the economic development of the nation, consequently, various government process of the country’s economy.

 

One of the response to the challenges of development in the developing countries is the encouragement of the entrepreneurial development sachem. Nigeria had even taken more robust step by including entrepreneur studies in the academic curriculum of her educational system. the believe of such policy makes is that such decision will inculcate entrepreneur spirit in the  mind of people so as to prepare them for wealth creation through small enterprises (Fasua, 2006).

 

A small scale enterprise is very crucial to the development, a

Of a country’s economy, especially countries like Nigeria. Entrepreneurship is sine qua non to national development, poverty eradication and employment general. It is the bedrock of any nations industrialization. A number of studies have been carried out on the impact of microfinance on entrepreneurial development. In fact, academic interest shows the impact of microfinance on entrepreneurial development is evidenced by the fact that some academic journals have devoted special issues to research establishing this linkage.

 

According to Amin, Rai and Topa (2003) focus their article on the ability of microfinance to reach the poor and vulnerable. They focus their article in such a manner because of concerns that microfinance is only serving people slightly below or above the line of poverty, however the really poor and destitute are being systematically excluded.

 

Thus, the question of whether microfinance improves or worsens entrepreneurial  development is still worthy of further research such as the one being undertaken in this study.

 

  • STATEMENT OF THE PROBLEM

In any country of the world, microfinance helps in the development of the country by granting loans to low income earners. According to copestake, halotra and Johnson (2001) analyza the impact of microfinance on firms and individual welling. Copestake at all focus on business performance and household income to establish a link between the availability of the time, it appeared that microfinance are not financing to the poor and business client. The research went forward to research the problems of this study which are:

  • Inability to encourage the development of new business.
  • Inability to help existing business grow or diversity their activities
  • Low rate of employment
  • Inability to create employment and income opportunities through the creation and expansion of micro enterprises.
  • Inability to increase the productivity and income of vulnerable group especially and the poor.
  • High rate of poverty
  • Economic dependence on foreign countries.

 

I.3 OBJECTIVE OF THE STUDY

The objective of micro-finance to entrepreneurial development made the central bank of Nigeria adopted it as the main source of financing entrepreurship in Nigeria.

Despite this, however, finance is still considered as one of the major hindrance to entrepreneurial development in Nigeria. While government and non government organization (NGOS) have been engaging a number of programmes in the county. They specific objectives of this study is,

  1. Examine the importance of entrepreneurial activates to the sustainable development of entrepreneurship in Nigeria.
  2. Examine the impact of microfinance institution on entrepreneurial.
  • Examine the challenges of accessibility to capital for the development of entrepreneurship in Nigeria.
  1. Create the awareness of the importance of microfinance institution to entrepreneurship development in Nigeria.

 

  • RESEARCH QUESTIONS

In order to achieve the above stated objectives, the following research questions are advanced

  1. Does microfinance contribute to entrepreneurial activities that can lead to sustainable development in Nigeria.

B: Do entrepreneurs have access to capital for the development of small and medium size entrepreneurship in Nigeria?

C: What are the prospects of microfinance in the development of entrepreneurship in Nigeria?

 

  • RESEARCH HYPOTHESIS
  • Do entrepreneurial development have any implication on the in development of Nigeria? The following null hypothesis are proposed and tested in the cause of this study.
  • There is no significant difference between entrepreneurs who use microfinance and those who do not.
  • There is no significant effect of microfinance institution activities in predicting entrepreneurial productivity.
  • There is no significant effect of microfinance institutions activities in predicting entrepreneurial development.
    • SIGNIFICANCE OF THE STUDY

The important of microfinance to the entrepreneurial development made the central bank of Nigeria adopted it as main source of financing entrepreneurship in Nigeria.

 

The significance of this study is to:

  1. Microfinance help in the provision of financial service to low-income, poor and very poor self employed people (Otero 2000).
  2. Microfinance has the ability to strengthen micro enterprise best practice among operators of small and medium scale enterprise.
  • The microfinance help to provide financial service to low income client including the self employed.

 

 

  • SCOPE / DELIMATION OF THE STUDY

The study would focus extensively on the impact of banks on entrepreneurial development of small, medium and large scale enterprises but focuses on small scale enterprises but focuses on growth and development in a stiffened economy of Nigeria.

 

The spread between the parallel and official of microfinance banks shall also be examined with the view of identifying the factors, responsibilities for the difference. And how it’s contributed to the growth of the country.

This study covers commercial places, sites, business environments, towns and cities in different states but focus extensively in Lagos state.

 

  • LIMITATION OF THE STUDY

Limitation is said to be the potential weakness if the study, that is to said, those attributed and difficult circumstance or challenges you find uneasy when writing up the project.

The weakness of the study arises as a result of certain factors encountered at several level of the exercise, such limitation includes

  1. FINANCIAL AND MATERIAL LIMITATION: This limitation arises due to insufficient finances to going to some micro finance banks in Lagos state, in other to get vital information from our respondents.
  2. THE SMALLNESS OF THE SAMPLE AS COMPARED TO THE ENTIRE POPULATION: It should be pointed out that limited resources to carry out the researchers disposal could not permit or allow for a greater sample size.
  3. LACK OF CO-OPERATION FROM OUR RESPONDENTS: This limitation arises because of insufficient information from our respondents due to lack of co-operation from them.
  4. UNNECESSARY BOTTLEVENECK MATTERS: for we to get to the bank for the materials, we had to pass through procedure that are not necessary, like signing of a document, going to one counter the other, please we are busy the management doesn’t want to see anybody. This becomes cumbersome.

 

  • DEFINITION OF TERMS

Microfinance has evolved as a economic development approach intended to benefits low income men and women. The term refers to the provision of financial services generally includes savings and credit. However, some microfinance institutions also provide insurance and employment services.

ENTREPRENEUR: An entrepreneur is people sho owns an enterprise or organization and also control and manage the affairs and activities of the business.

An entrepreneur can be said to be sole trader or sole proprietorship of a business. He or she runs the day to day activities of the business.

LOAN: Loans are said to be long term debit issued to business client by the financial institution to be paid back with interest at the specific period using collateral as security.

COLLATERAL: This is the property a borrower is willing to pledge to the banks as a secondary source of payment, should the first source (income and profit) dry up securities for bank lending according to Nzoha (1999). Security in this direction is a right or interest in property given to a creditor by a debtors so that is event of the debtor fairing to pay its is event of the debtor as when due, the creditor may reimburse himself for the debt out of the property changed.

 

PLEADING :Pleading entitles the creditor exclusive possession of (the property until the pledge repays a debt white ownership risk with the debtor subject to the exercise of his right.

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