Liquidity And Credit Management In Nigeria Banking And Industry

Liquidity And Credit Management In Nigeria Banking And Industry

Abstract

Liquidity operation seeks insure the attainment of short- term ideal of financial policy, which means conservation of desire financial total. It’s veritably important aspect of financial policy perpetration and control marketable banks produce plutocrat every creates inharmonious with the immersion capacity of the frugality macro profitable insecurity may affect in order to maintain relative macro profitable stability must enhance in place on liquidity operation to leave out the saving liquidity growth in the banking system lending and investment operation of marketable bank have been extensively and considerably bandied in colorful literatures. It has also been stated that anyone who express to adopt from marketable bank should be most concerned with the loan and investment programs and ways. The top profit making exertion of a marketable bank produce loan available to its client and in doing this, it faces misgivings and thus risks plutocrat kinds. These misgivings are with regard to its features volume and costs of finances and the unborn income and price of the colorful types of means that it acquire. A bank doesn’t thus consider earning alone rather is seeks some optimum combination of earning liquidity and safety to secure more or one it must frequently immolate some of the other for case to get advanced earnings a bank numerous have to incurred further threat and liquidity andvice-versa threat because of the veritably high rate of their liability to their total means. Liquidity and operation have recrimination on bank profitability and capability to meet its obligation both to the regulation authority grounds and shareholder.

Chapter One

Preface

Background Of The Study

Liquidity operation seeks insure the attainment of short- term objects of financial policy, which means conservation of desire financial total. It’s veritably important aspect of financial policy perpetration and control marketable banks. produce plutocrat everyday but when the quality of plutocrat created in inharmonious with the immersion capacity of the frugality. Macro economics insecurity may affect in order to maintain relative macro economics stability important reliance is place on liquidity operation to leaven out the swing liquidity grown in the banking system.

Lending investment operation of marketable bank have been extensively and considerably bandied in colorful literatures. It has also been stated that anyone who express it adopt from marketable bank should be most concerned with the loan and investment programs and ways.

The top profit making exertion of a marketable bank is making loans available to its client and in doing this; it faces misgivings and thus risk plutocrat kinds. These misgivings are with respects to its point volume and costs of finances and the unborn income and price of the colorful type of means that it acquires.

A bank doesn’t thus consider earning alone rather is seeks some optimum combination earning liquidity and safety o secure more or one. It must frequently immolate same of the other for case, do get advanced earning, a bank may have to incurred further threat and liquidity andvice-versa liquidity and credit operation in Nigeria banking assiduity.

still, marketable banks are limited in their capability to assure threat because of the veritably high rate of their liability to their total asset.

Statement Of The Study

Liquidity and credit operation have recrimination on bank profitability and capability to meet its obligation both to the regulation authority, depositors and shareholders. It could spark off mass cash pullout therefore plunge the bank into deeper heads. In analyses of credit and liquidity operation of community bank.

I shall examine its means quality, which include its performing and non performing loans. In addition sweats would be made to look onto the bank capital acceptability and rate and its stock of threat asset using different measure of liquidity solvency.

Exploration Thesis

1. Ho Credit installations isn’t useful in banking assiduity.

Hi Credit installations is useful to banking diligence.

2. Ho Microfinance bank has no impact on the development of Ifelodun Local Government.

Hi Microfinance bank has impact on the development of Ifelodun Local Government.

3. Ho Microfinance bank render backing to small scale assiduity

Hi Microfinance bank doesn’t render backing to small scale business.

The Purpose Of The Study

marketable banks act as matter vies by collecting deposit and paying interest on them and granting loan charging the borrowers and depositors, their main goes of bank is to make profit. Part from granting loan bank also generates liquidity and credit operation in Nigeria banking assiduity. Profit on investment in order to maximize their earning every bank attempt to structure its asset and capacities in such a manner as to yield the loftiest retune subject to some sufficient cash and other asset in its portfolio together with liability to raise finances snappily from other sources to enable to meet its payment obligation and fiscal commitment in a timely manner.

However way factors bear on nature of operations of marketable bank generally and advancing functions in particular. An important factor which is the focus of this paper is the “ propositions in liquidity operation of marketable bank ” these propositions defined by hair WorthG. Walker( 1967) have was since the early days of marketable banking.

1. The marketable loan which stated that marketable liquidity is assured as long as its means are held in short loan. That would be liquidity in the source of business. The ideal means under this proposition are short- time size liquidity loans granted for working capital pursues.

2. The shift capability proposition which supposed a bank liquidity is maintained of it holds asset that could be vended or shifted to other lending or investors for cash.

3. The awaited income, proposition which states that bank “ liquidity can be planned if listed disbursements are grounded on the unborn income of the borrowers ”.

4. The liquidity operation proposition which maintains that banks can meet liquidity operation conditions by hidings in the request for fresh finances.

These propositions were innovated in a advanced terrain different from the Nigeria terrain which is till developing one liquidity and credit operation in Nigeria banking assiduity.

This study there aims to discover the extent the microfinance bank plc is guided by the below enumerated propositions in the operation of its lending function and global liquidity problem. To condense this lending practices and procedures of the bank will also be estimated.

An in- depth attempt is made to analysis the applicable rate relating to credit and I liquidity of the bank. This study issub-divided of the study the work whilst applicable is review in chapter two with brief history of the bank, the methodology of exploration is presented in chapter three, chapter four is an analysis of data the work is epitomized conclusion and recommendation are given in chapter five. The rest of these chapters take a cursor look at the literal development and functions of the bank in Nigeria as will as overview of liquidity problems in marketable banks.

The Compass Of The Study

The study shall concentrate on the credit and liquidity operation of microfinance bank for a period of three times 2002 – 2005, this period is named because it’s current and has also witnessed both bank boon bank failure defying from poor liquidity and credit operation. This focus is no microfinance bank plc because of its top position in the banking assiduity.

Limitation Of The Study

In any exploration work a many problems generally encountered, first and foremost, the time factor constrain bound to hamper the exploration because of the time constraint. It wasn’t possible to carry out the study considerably as it was firstly anticipated liquidity and credit operation in Nigeria banking assiduity. There’s also problem arising from collection of the questionnaire distribution due to non challent station of some repliers library installation is another limitation factors there’s shy in libraries to consult for the purpose of opting secondary data

The Significance Of The Study

The services offered by marketable banks are multitudinous and they include

rallying of saving marketable banks performs a veritably important function to all sector of the frugality by furnishing grease for the rallying of saving and making the finances available to business to enable them to expand their productive capacity and to individualities and homes to grease consumption.

Extension of credit installations According to Needit in( 1984) the primary function o marketable bank is the extension or staying borrowers in banking credit available marketable banks are rendering great social services through their conduct product in increase capital investment is expanded and high standard of lives in realized.

Transfer of finances or plutocrat transmission marketable banks serve as medium for transubstantiating finances. They grease payments by enabling business, Government and consumers to distribute without cash, cheques and credit card are use for the bank purchases as measured by naira quantum of sale.

Creating plutocrat marketable bank produce plutocrat used to extend productive installations else there would be a retardation of frugality conditioning generally as business would be force to stay until sufficient profit are made before they could expand liquidity and credit operation in Nigeria banking assiduity.

transnational trade services All marketable banks are involve in the fiscal aspect of transnational trade and the service needed supporting this important part of the country’s frugality similar services included bills for collection talkie, credits and open quantum which are instrument use in conduct and expert trade.

Services to the trippers All marketable bank in Nigeria offer services to the trippers by furnishing them with trippers cheques are form of trip currency giving the would the security of letters of credit and the convenience of a original currency.

Status inquiries A client gives his name to another bank for reference purpose and enquiry is transferred to the client bank to find out about his fiscal and particular accounts in marketable bank.

Business premonitory services The end of this service is to help small business client to develop their business to such a way that they can attract bank finance.

Description Of Terms

1. Bank A place were goods and other precious accoutrements are kept i.e. cash, asset, etc they also accept cash deposit from the public and other business concern.

2. Cheques This is the instrument use by the guests operating current account with the bank to withdraw plutocrat.

3. Loan This is the( process of advancing plutocrat to banks client in which the interest is agreed and fixed it’s only meant for client operating current account.

4. Collateral A credit or tally isn’t satisfied with the quantum of capital held by the borrower may support the debt property whose value can be liquidity and credit operation in Nigeria banking assiduity determined beforehand and which can be readily converted into cash is preferred for this purpose.

5. Capital The types and value of capital if the borrower affect his capability to gain credit capital is guarding the creditor against loss hence the credit critic must precisely check the balance distance of the borrower.

6. Credit Transfer It’s a types of banking system of payment whereby cash can be withdraw down another branch of the bank or another bank entirely from that where the account is held.

7. Bank Draft bankers draft is regarded as near plutocrat instrument, it’s further respectable than a cheque can be dishonor for lack of finances or irregularities in medication but in the case of draft, the discoveries has been moved out of the client account.

8. Microfinance Bank Can be described as a tone sustain fiscal institution possessed and managed by a group of people in microfinance for the purpose of furnishing credit collection deposit and other fiscal services to public largely.

9. Small Business Small business refers to tone introduced largely tone financed and nearly tone managed and it’s of fairly small size when considered as part of the assiduity.

10. Organization In profitable term association can be described as profitable institution having accoutrements coffers for the purpose of making product of profit, liquidity and credit operation in Nigeria banking assiduity.

11. Deposit Account Saving accounts finances that aren’t needed for immediate use can be deposited in this account fund deposited are generally for a special period which may be between five month to one time therefore its nominated turn deposit