The Impact Of Commercial Banks Lending On The Economic Growth In Nigeria

The Impact Of Commercial Banks Lending On The Economic Growth In Nigeria

Abstract

marketable banks are profit making gambles, they aren’t a charitable association and as similar they partake with the other business the same set of anticipation concerning the health of the frugality. It’s in this light that they reference fund from supernumerary profitable unit and make loans available to borrowers on interest which is else known as intermediation part of marketable banks. This part is a major sources of profit to marketable banks. So the purpose of this study is to know how fair the marketable banks lending has contributed to the growth of the frugality. In order to achieve the objects, the experimenter set forth suppositions that has been tested with ki- forecourt. The information bear for this exploration were generated from secondary data and primary sources through the use of questionnaire.

Chapter One

Preface

Background of the Study

Lending which may be on the long term short term or medium term base is one f the services that marketable banks do render to their guests. In other words banks do grant loans and advances to individualities, business associations as well as governments in other to enable them embark on investment and development conditioning as a means of abetting profitable growth in particular or contributing in the profitable development of Nigeria in general.

marketable banks are the most important saving, rallying and fiscal coffers allocation institutions. Accordingly, these places makes them an important miracle in profitable growth and development. In performing this part it most be realized that banks have the eventuality, compass and prospects for marshaling fiscal coffers and allocating them to productive investment. thus, no matter the sources of generation of income or the profitable programs of the country, marketable banks would be interested in giving out loan and advances to their multitudinous guests bearing in mind the three headliners guiding their operation which are, profitability, liquidity, and solvency. still, marketable banks decision to advance out loans are told by a lot of factors similar as the prevailing interest rate, the volume of deposits, the position of their domestic and foreign investment banks liquidity rate, prestige and public recognition to mention a many.

Lending practices in the world could be traced to the period of artificial revolution which increased the pace of marketable and product conditioning thereby bringing about the need for large capital out lay for systems numerous captains of diligence at this period were unfit to meet up with the unforeseen upturn in the fiscal conditions and thus turns to the banks for backing. According to Adedoyin and Sobodun 91991) “ Lending is really the hearts of banking business thus its administration requires considerable chops and dexterity on the part of the bank operation. still, the exigency of banks in Nigeria in 1872 with the establishment of African Bank Corporation( ABC) and after appearance of other banks in the scene during the social period witnessed the beginning ofbanks advancing practices in Nigeria. Though, the lending practices is the banks were prejudiced and discriminative and couldn’t be said to be operating on transnational practices of stylish norms as only the deportees were given loan and advances. This among other reasons led to the establishment of indigenous banks in Nigeria. Prior to the arrival of structural adaptation programme( SAP) in the country in 1986, the lending practices of banks were rigorously regulated under the close surveillance of the banks administrative bodies. The SAP period brought about some relaxation of the strict rules guiding banking practices. The bank and other fiscal institution Act; Correction( BOFIA) 1998, requires banks to report large borrowings to the CNB. The CBN also requires that their total value of a loan credit installation or any other liability in respect of a borrower, at any tune, shouldn’t exceed 20 of the shareholders fund bloodied by loss in the case of marketable bank other banking enactment quested that banks loan should be directed to preferred sector of the frugality in order to enhance profitable growth and development. In full consideration of all these regulations the bank resorted to prudential guideline necessary to avoid facture and to enhance maximum profitability in the bank lending conditioning. These generally depends on type of bank, the capital base the deposit base and viscosity of deposit, the credit guideline issue from time to time by the controlling authority and internal programs of the banks since loans and advances regard for loftiest chance of the total means of the bank. This study becomes imperative because marketable banks in Nigeria need to understand how to manage this huge means in term of their loan and advances. For the banks to balance their main objects of liquidity, profitability and solvency banks must bear in a way, that their implicit guests are attracted and retained. This study will by to give sapience into the stylish lending practices, geste and how marketable banks have impacted on profitable growth of Nigeria.

The major objects of this design work is to confirm the effectiveness of the common determinant of marketable banks advancing on the profitable growth in Nigeria, starting from its emergence to this present day.