AN ASSESSMENT OF THE ROLE OF FINANCIAL INSTITUTION IN THE NIGERIAN MARITIME INDUSTRY

AN ASSESSMENT OF THE ROLE OF FINANCIAL INSTITUTION IN THE NIGERIAN MARITIME INDUSTRY

ABSTRACT

To summarize, the purpose of this study is to investigate loan syndication operations in Nigeria. The study will also make recommendations on how to solve the loan syndication problem in order to improve loan syndication practice in Nigeria.

CHAPITRE ONE

INTRODUCTION

1.1 STUDY INTRODUCTION

Financial institutions play an important and landable role in the nation’s economy. Their primary goals are to increase economic growth and development by properly mobilizing resources and providing capital for industrial development.

Banks in Nigeria performed their intermediary function in the early years of operation by granting loans primarily on an individual basis (i.e. separately), but as the country entered the

As development progressed and more investment opportunities became available, industrialists began to demand large sums of money, which banks provided on a medium or long-term basis.

However, banking is a highly regulated industry all over the world, with restrictive monetary and credit guidelines in loan growth and reserve requirements, sectoral allocation to priority sectors of the economy, and excess liquidity mop-up through the assurance of stabiclation securities to the bank, to name a few. As a result of these restrictions, it is difficult for a bank to meet the large loan demanded by their customers. Furthermore, lending is not without risk, and banks prefer to spread their risk with others in the banking industry.

Against this backdrop, financial institutions

come together forming what is know as “Consortium” to advance finds is called loan syndication and is sometimes called “Cosortun”. Lending can also be defined as an agreement between two or more lending institutions to provide a borrower with credit through the use of common loan documentation.

Loan syndication began in Nigeria in the 1960s, when a consortium of commercial banks and acceptance houses discounted trade bills for marketing boards under the produced bill finance scheme. Formalized loan syndication emerged during the 1970s oil boom, when adequate capital was required to finance industrialization programs. Few merchant banks had been established during this time period.

Because of the need to provide adequate financing, loan syndication has taken on an international dimension.

Capital to finance the world’s rapidly expanding economy. One or more finance companies manage and underwrite an international syndicated credit. Normally from a location other than the borrower’s domicile, lenders from different countries could provide the borrower with access from their countries or move its own currency from other contracts of domicile.

1.2 DEFINITION OF THE PROBLEM

To investigate why loan syndication is not properly managed despite monetary authorities giving it priority attention. Despite its strategic importance in financing viable projects capable of injecting foreign currency, creating jobs, and facilitating mediocre economic development.

To critically examine the role of financial institutions in loan syndication management in the economy.

Loan syndication is the result of legal circumstances.

Lending restrictions, risk sharing, and liquidity issues are all issues. The researcher wants to know if, despite the constraints, it is still a viable option for business financing.

1.3 OBJECTIVES OF THE STUDY

For an economy to grow, a secondary source of financing viable investment projects beyond the limits of a single financial institution is required; it is on this basis that we would like to define the objectives.

The following items will be included in the research study:

i. To identify the fundamental issues confronting loan syndication and to suggest how much of those issues can be resolved.

ii. To determine the impact of loan syndication on economic development.

iii. To highlight the potential of loan syndication in the economy

iv. To recommend that a syndicated loan be avoided.

Unlike other loans. Rather, it is subject to conditions, attracts a higher interest rate, is subject to default, and time lapses in packaging as a result of consortium bank bureaucracy.

1.4 THE STUDY’S SIGNIFICANCE:

This study is expected to provide the following individuals with useful information on loan syndication. Students use this project to conduct research and gather information on the rules of financial institutions in the management of loan syndication.

Financial institutions will learn how to keep their Loan syndication agreements by participating in this project. It will also encourage financial institutions to provide financial accommodations through Loan syndication because it is more beneficial to them. Financial institutions will also learn how to shorten the time it takes to package a loan.

syndicated loan.

With the help of this project, the borrower will understand the proper procedures involved in obtaining a loan through syndication. The project will benefit both the government and the targeted audience because loan syndication contributes significantly to the development of our economy. The government will learn more about the benefits of loan syndication in our economy as a result of this project.