1.0  INTRODUCTION                         

  1.       Background of the study                    
  2.       Statement of problem                 
  3.       Objective of the study                
  4.       Research Question                      
  5.       Research Hypothesis                   
  6.       Scope  of the study                           
  7.       The significance of the study        
  8.       Definitions of Terms                   



2.1  Nigerian Banking System      

2.2  Origin of Bank Lending         

2.3  Types of Bank Loans            

2.4  The Interest of the Bank             

2.5  Basic Principles of Lending    

2.6  Canons of good Lending              

2.7  Various sectors were credit facilities could be channeled                  

2.8  Bank lending principles and Analyses 



3.1  Research Design Used            

3.3  Area of the study                

3.3  The Population of the Study  

3.4  Sampling size and Sampling Techniques      

3.5  Instrument for Data Collection            

3.6  Validation of Instrument                           

3.7  Reliability of Instrument                            

3.8  Method for Data Collection                 

3.9  Method of Data Analysis                           



4.1  Research Questions      

4.2  Testing of Hypothesis    

4.3  Findings                      



5.1  Discussion of Findings   

5.2  Conclusion                   

5.3  Recommendations        

5.4  Implications of the Findings

5.5  Suggestions for further Study

5.6  Limitations of the study       






1.1  Background of the Study

The lending process as it pertains to my case study (First Bank Nig. Plc) has immensely contributed to the development of the Nigerian economy.

Bank lending is very relevant to all sectors in the economy both private and public sectors because it is one of the major sources of finance. Banks in this idea entails commercial banks, which mainly grant short term credit facilities and development banks which grant medium and long term credit facilities. The latter include Nigerian Agricultural and Rural Development Bank and Nigeria Industrial Development Bank.

In 1960’s Agriculture was termed the mainstay of our economy. The fact is that Federal Government embarked on credit facilities otherwise known as agricultural credit which gingered every farmer both subsistence and commercial to put more effort in the field.

At the present time, there is a lot of changes in both commercial and industrial sectors. New structure abound all over the country. Commercial activities have become order of the day. Traders can easily secure loan and overdraft in order to raise capital for their commercial activities especially in Emene – Enugu, Metropolis.

First Bank of Nigeria Plc, has helped many customers in the area of credit facilities to enable them finance their various projects.

Therefore, the problem of lack of fund for the execution of private and public projects has been ameliorated through bank lending especially First Bank of Nigeria Plc.

1.2  Statement of Research Problem      

       The researcher has understood that industrialists, commercialists, profit and non-profit organizations, individuals, students and the society at large would benefit from the subject matter of this work.

       That is why the problem is brought for more analyses.

       The problem is the inability of some customers in the repayment of loan secured. Also to inability of customers to secure credit facilities.

       People through ignorance and lack of knowledge or fear of uncertainty are unable to secure loan and advances for investments or to finance their projects.

       Some people may have a good project to embark upon but do not have collateral security normally required by their creditors. All these and more others are problems associated with this research. Again, insufficiency of fund to carry on various activities in the economy leads to low profit and retarded economic growth. If these trends are allowed to continue, it will have a devastating effect in the economy. This is why the empirical analysis of bank lending cannot be ignored. Hence this study seeks to identify the causes and to suggest some possible solution to them.

1.3  Objective of the Study    

       The objective of this research includes:

  1. To examine how important bank lending is to the Nigerian economy.
  2. To examine the basic principles of banking lending.
  3. To examine the response of customers in repayment of loan.
  4. To examine the various types of acceptable collateral securities.
  5. To eradicate the fear people do have in securing credit facilities.
  6. To educate students and other people about bank lending.

1.4  Research Questions  

  1.             How do you view the present economic condition of Nigeria, especially as it affects the importance of bank lending?
  2.            Do customers find it very difficult to repay the loan?
  3.          Must collateral security be prevented before bank can lend money?
  4.          Are the canons of lending such as profitability, amount, suitability, purpose of the loan, safety and integrity of the borrower helpful to the banker in the process of lending?
  5.           Can lack of collateral security lead to bad debt?
  6.          Do bankers require heavy amount as interest on loan from the borrowers.
  7.         From the two problems, diversification of loan and lack of security, which one do bankers encounter most?
  8.         Do people in the rural areas find it very difficult to borrow from bank?
  9.          Is bank lending truly contributing to the development of the economy?

1.5  Hypothesis   

Hypothesis 1

H0:  Bank lending does not contribute to the development of     economy.

H1:  Bank lending contributes to the development of economy.

Hypothesis 2

H0:  Bank lending is not source of capital.

H1:  Bank lending is a source of capital.

1.7  The Significance of the Study

       This research work will create awareness on the importance of bank lending to the development of the economy.

       To farmers, bank lending is a major source of credit facilities for expansion and commercialization.

       The credit facilities gingers farmers both the subsistence and commercial ones to put more effort in their field thereby improving the economy.

       Traders can secure loan and overdraft to raise capital for their commercial activities.



Bank lending also helps in industrial development. When there are credit facilities, more industries are built which improve the standard of living by creating job opportunities to people.

       Many industries will be built which is an evidence of development in the economy with bank lending.

       To the banking industries, it will help in yielding more profit for them because when they lend credits to the people both private and public, they will get interest in return which keeps the banks going and cathering for their needs. Banks give loans, overdraft, advances etc which yield income for them in return.

       To young undergraduates, it will serve as a basis for them and aid them when they are writing their projects.

1.8  Definition of Terms

       The related terms below are defined to the understanding of lay people.

Bank Lending: This term is used in the banking system in which the bank arrange with its customers to secure credit facilities. Therefore, the borrower is expected to pay interest on the amount borrowed.          

Economic Development: This is an overall trend or process in which socio-economic transformation is achieved with little or no reference to other significant degree of technological economic growth plus changes.

Credit Guidelines: This is the CBN annual guideline to commercial banks in respect to the credit that may be extended to various sectors and sub-sectors of the economy.

Credit Facilities: This includes loans, overdrafts, discounting, drafts and advance. They are granted by banks to various potential customers.   

Collateral Securities: collateral serves as security to the banker for the loan offered to the borrower should the latter become delinquent in repayment.  

Preliminary Expenses: These are expenses incurred at the initial stage of making investigation and formation of company.

Capital: This is the amount being sought by potential borrower which must be seriously assessed with respect to its adequacy or otherwise for the execution of the project in question.

Charge: This is legal transfer of ownership by a way of mortgage or assignment.

Mortgage: This is the conveyance or transfer of an interest in land or other assets as security for a debt.

Security Department: This is the department charged with the responsibility for granting and accepting advances and securities in First Bank Plc.

Bond: This is a document under seal whereby a person binds himself to pay a certain contract.

Deposit Account: This is an account opened for the purpose of earning interest.

Overdraft: One of the methods of bank lending, where the borrower is given permission by bank to draw more than what is deposited in the persons’ account.

Advances: These are granted in form of overdraft upon a current account or by loan upon a separate account loan.

Security loans: These are referred to as loans secured by marketable securities or other market valuables.

Unsecured loan: These are made by bank upon credit information of the borrower and his integrity to pay his obligations.

 Demand Loans: These are loans with fixed maturity data payable upon demand of the bank, borrowers billed at specified interval for the interest due.

Account:  This is a statement of dealings expressed in words and figures according to book-keeping form.

Loanable Interest: This is an interest paid by the borrower to the bank on the amount borrowed.

Financial Analysis: This section deals with the assessment of the project from monetary point of view. It does this by using the information gathered from the marketing and technical studies to estimate the total project cost, project and cost accounts cash flow projection and project balance sheet.   

Working capital: This is the total amount needed at the beginning of a new venture in order to meet operating expense as money for the payment of employees, rent and utility supplies, money for fuel, water etc.

 Capital Investment: Under this section, costs involved are the cost of land and its development, building facilities and cost of machinery and equipment including installation charges.


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