ABSTRACT
In conclusion, the purpose of this study is to investigate the loan syndication processes in Nigeria. The study will also include recommendations for how to overcome the problem of loan syndication in order to improve loan syndication in Nigeria.
CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
Financial institutions occupy a critical position and play a significant role in the nation’s economy. Their main goals are to properly mobilize resources and provide money for industrial development in order to boost economic growth and development.
In the early years of banking in Nigeria, banks served as intermediaries by providing loans primarily on an individual basis (i.e., separately), but as the country progressed and more investment opportunities arose, industrialists began to demand large sums of money, which banks provided on a medium or long-term basis.
Banking, on the other hand, is a highly regulated industry around the world, with strict 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 demands made by its customers. Furthermore, it is commonly understood that lending entails risk, and banks prefer to spread their risk amongst their peers in the banking business.
Against this backdrop, banks join forces to form a “Consortium” to advance loans. This process is known as loan syndication, and it is also known as “Cosortun.” Lending can also be defined as the act of borrowing money.
In conclusion, the goal of this research is to investigate loan syndication practices in Nigeria. The study will also include recommendations for how to overcome the problem of loan syndication and enhance loan syndication practice in Nigeria.
STATEMENT OF PROBLEM
To find out why monetary authorities aren’t giving loan syndication the attention it deserves. Despite its crucial role in funding feasible projects that can inject foreign currency, create jobs, and facilitate rapid economic growth.
To critically investigate the role of financial institutions in the economy’s loan syndication management.
Loan syndication is the result of a combination of factors including legal lending limits, risk sharing, and liquidity issues. Despite the constraints, is it still a viable alternative for business finance, according to the researcher?
OBJECTIVES OF THE STUDY
It is on this basis that we would want to outline the objectives. For an economy to thrive, there must be a supplementary source of financing viable investment projects beyond the constraints of a single financial institution.
The following items will be included in the research study:
i. To identify the main challenges that Loan Syndication faces and to indicate how much of the problem can be solved.
ii. To investigate the impact of loan syndication on economic development.
iii. To draw attention to the economic potential of loan syndication.
iv. To advise that a syndicated loan is not different from any other loan. Rather, it is subject to conditions, has a higher interest rate, is liable to default, and has time lags in packaging due to consortium banks’ bureaucracy.
SIGNIFICANCE OF THE STUDY
This research is aimed to give the following with relevant information on loan syndication: The students do research and gather knowledge on the rules of financial institutions in the administration of loan syndication through the use of this project.
This project will teach financial institutions how to stick to their loan syndication agreements, as well as encourage them to provide financial accommodations through loan syndication because it is more beneficial to them. Financial institutions will also learn how to reduce the time it takes to package a syndicated loan.
With the help of this project, the borrower will be aware of the proper steps for getting a loan through syndication. Because loan syndication is so important to the growth of our economy, both the government and the private sector participate in it.
Leave a Comment