In carry out this research, Attempts was made to evaluate the causes and the effect of bad bests in banks lending to fulfill this task. We established the objectives of this study which included the identification of the causes of bad debt or the banks and the economy at large recommendation of possible solutions. In conclusion on the objectives, primarily data was collected through field survey of the study population of 30 respondents of which 20 respondents where successfully covered representing 66.7 percent of the total population extensive literature review was also carried out in libraries in Nigeria. The data obtained were presented in tabulation and percentage for analysis.
TABLE OF CONTENT
Title page i
Table of content vii
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of Problems 3
1.3 Purpose of the Study 4
1.4 Scope, Delimitation of the Study 5
1.5 Research Questions 6
1.6 Need/Significance of the Study 7
1.7 Research Hypothesis 8
1.7 Delimitation Scope and Limitations of the Study 9
1.8 Operational Definition of Terms 10
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction 13
2.2 Theoretical Rationale 13
2.4 Cause of Bad Debt 24
2.4 Causes of Bad Debt 26
2.5 Poor Financial Analysis and Financial Knowledge 28
CHAPTER THREE: METHODOLOGY
3.0 Introduction 32
3.1 Research Design 33
3.2 Area of Study 33
3.3 Study Population 34
3.4 Sample Size and Sampling Techniques 35
3.5 Instrument for Data Collection 36
3.6 Validity of Research Instrument 36
3.7 Reliability of the Instrument 36
3.8 Method of Data Collection 37
3.9 Method of Data Analysis 37
CHAPTER FOUR: PRESENTATION OF RESULTS
4.1: Characteristics of the Respondents 38
4.2 Presentation and Analysis of Data 39
4.3: Testing of Hypothesis 43
CHAPTER FIVE: DISCUSSION OF RESULTS
5.1 Discussion of the Findings 52
5.2 Implication of the Findings 54
5.3 Data Findings 55
5.4 Conclusion 56
5.5 Recommendations 57
5.6 Limitation of Study 58
5.7 Summary 59
Appendix II 60
1.2 STATEMENT OF PROBLEMS
It is a well-known fact that there has been a public concern on the impact of bad debt on commercial bank lending on Nigeria economy. The various management in position has been accessed of giving loans to applicants without a good or reasonable security as collateral. This has immensely given room to economic problems/crises 14i that some customers even when given a reasonable collateral tends not to meet up with the demand of the agreement
This is as a result of borrower inconsistencies in responds to the demand made by the various banking institutions (commercial banks) for repayment of loans and advances made to them. This also in turn reduces the asset base of the bank as a result causing inflation in the economy, by devaluation of our naira in foreign exchange market, hence discouraging international/foreign investors from investing in the country.
However, the major issues are:
1. How exactly does a commercial bank cope with the effect of bad debt?
2. What really are the impact of bad debts on commercial banks in Nigeria economy.
3. What length does this bad debt go in causing inflation which leads to devaluation.
4. What roles do management play in ensuring that agreements stipulator are strictly followed.
5. The role of foreign exchange market in investment in our country.
1.3 PURPOSE OF THE STUDY
The objectives of the study are aimed at the following:
To evaluate the impact of bad debts on commercial banks leading on Nigeria economy, to identify the problems aimed from bad debts. To identify its immediate remote causes, to determine its effect: on he economy in general. To make positive recommendations on how to possibly profound solutions and conclusions to it, to establish the level and impact of risk to an acceptable rate, and then suggest on how to improve the existing control method programme.
1.4 SCOPE, DELIMITATION OF THE STUDY
The scope of this study is intended to be more encompassing but was hampered by certain unavailable constraints; nevertheless, it is limited to commercial banks as well as their staff. Some of the constraints are our poor financial position which compelled us to restrict this volume due to the high cost of stationeries. The reluctance of some commercial banks to give out information concerning some factors were discussed in the literature review and the theoretical rationale.
The scope tries to find out the impact of bad debts on commercial bank leading on Nigeria economy; and as such, its findings cannot be generalized to other types of banks.
1.5 RESEARCH QUESTIONS
This study seeks to answer the following questions:
1. Are there impacts created by bad debts on commercial banks leading on Nigeria economy?
2. Does bad debts really come into place in commercial bank leading systems?
3. Are banks really aware of the positive and negative effect/impact of bad debts?
4. What are the problems posed by bad debts on the commercial banking sector and on the economy in general as regards bank leading?
5. What is the nature of relationship between bad debt provision and profit, hence the effect on individual and on investment growth in the economy?
6. Are there policies governing issues on bad debts on commercial leading on Nigeria economy?
7. These policies governing issues on bad debts do they vary fr6m one commercial bank to the other or they do not vary?
8. How often does this issues of ad debt affect the commercial banking sector of the country’s economy?THE IMPACT OF BAD DEBT IN COMMERCIAL BANK LENDING IN NIGERIA