1.1 Background of the study
Access to credit has a positive impact on economic growth and affect the distribution of income. The evidence that finance is a constraint on development is overwhelming as studies have shown that a significant positive correlation exists between variable which capture through in the financial system, such as the ratio of money supply to GDP, or the ratio of banking system credits to the private sector to GDP, on the one hand, and the level of per capital growth and income, on the other. In the 1980s, most developing countries interfered substantially in the financial sector by setting interest rates for savings and lending, as well as directing the allocation of credit in the economy, the accelerate and direct them to areas of high economic and social priority, by the early 1990s, however, it became apparent that the approach was counter productive as the repressed financial sector could no longer mobilize loan able funds for investment.
Financial sector reforms were, therefore, introduced to correct the problems caused by financial repression such refer as included interest rate liberalization and the removal of ceilings and other controls on credit allocation. The reforms were expected to have a positive impact on savings mobilization and credit allocation but reversed is the cash when considering the state of credit in Nigerian Banking system today.
1.2 STATEMENT OF THE PROBLEM
In Nigeria, as in many other developing countries, the ratio of credit to GDP has not increased significantly. The quantity, quality and cost and availability of loan able funds have continued to constrain the expansion of business and self employment (which are effective channel of job creation)
ReferencesTHE EFFECTS OF CREDIT MANAGEMENT ON EFFICIENCY AND PROFITABILITY IN BANKING INDUSTRY (A CASE STUDY OF FIRST BANK NIGERIA PLC)