LIQUIDITY AND CREDIT MANAGEEMNT IN NIGERIA BANKING AND IDNSUTRY (A CASE STUDY OF IFELODUN MICROFINANCE BANK, IKIRUN)


LIQUIDITY AND CREDIT MANAGEMENT IN NIGERIA BANKING AND INDUSTRY (A CASE STUDY OF IFELODUN MICROFINANCE BANK, IKIRUN)

ABSTRACT 

Liquidity management seeks ensure the attainment of short-term objective of monetary policy, which means maintenance of desire monetary aggregate. It is very important aspect of monetary policy implementation and control commercial banks create money every creates incompatible with the absorption capacity of the economy macro economic instability may result in order to maintain relative macro economic stability must enhance in place on liquidity management to leave out the saving liquidity growth in the banking system lending and investment operation of commercial bank have been widely and extensively discussed in various literatures. It has also been stated that anyone who express to borrow from commercial bank should be most concerned with the loan and investment policies and techniques. The principal profit-making activity of a commercial bank create loan available to its customer and in doing this, it faces uncertainties and therefore risks money kinds. These uncertainties are with regard to its features volume and costs of funds and the future income and price of the various types of assets that it acquire. A bank does not therefore consider earning alone instead is seeks some optimum combination of earning liquidity and safety to secure more or one it must often sacrifice some of the other for instance to get higher earnings a bank many have to incurred more risk and liquidity and vice-versa risk because of the very high ratio of their liability to their total assets. Liquidity and management have implication on bank profitability and ability to meet its obligation both to the regulation authority depositions and shareholder.

TABLE OF CONTENT

TITLE PAGE i

CERTIFICATION ii

DEDICATION iii

ACKNOWLEDGMENT iv

ABSTRACT v

TABLE OF CONTENTS vi-vii

CHAPTER ONE

1.0INTRODUCTION

1.1BACKGROUND TO THE STUDY

1.2STATEMENT OF THE PROBLEM

1.3RESEARCH HYPOTHESES

1.4PURPOSE OF THE STUDY

1.5SCOPE OF STUDY

1.6LIMITATION OF THE STUDY

1.7SIGNIFICANCE OF STUDY

1.8DEFINITION OF THE TERMS

CHAPTER TWO

2.0LITERATURE REVIEW

2.1CONCEPTUAL FRAME WORK

2.2LIQUIDITY THEORIES

2.3.1THE ANTICIPATED INCOME THEORY

2.3.2THE ORIGIN OF BANK LENDING

2.3.3IMPORTANCE OF CREDIT

2.4SOURCES OF LOANS ABLE FINDS

2.5FIRST BANKS OF NIGERIA PLC A PROFILE

CHAPTER THREE

3.0RESEARCH METHODOLOGY

3.1RESEARCH DESIGN

3.2AREA OF STUDY

3.3POPULATION OF THE STUDY

3.4INSTRUMENT FOR DATA COLLECTION

3.5METHOD OF DATA ANALYSIS

CHAPTER FOUR

4.0PRESENTATIONS AND ANALYSIS OF DATA COLLECTION

4.1INTRODUCTION

4.2ANALYSIS OF PERSONAL DATA

CHAPTER FIVE

5.0SUMMARY

5.1CONCLUSION

5.2RECOMMENDATION

Bibliography

KLN

CHAPTER ONE

1.0 INTRODUCTION

Liquidity management seeks to ensure the attainment of short term objectives of monetary policy, which means maintenance of dose rue monetary aggregate. It is very important aspect of monetary policy implementation and control.

Universal banks create money every day, but when the quantity created is compatible with the absorption capacity of the economy macro economic instability may result. In order to maintain relative macroeconomics stability, mush reliance is placed on liquidity, growth in the banking system.

Lending and investment operation of universal banks have been widely and extensively discussed in various literatures. It has also been stated that any one who expects to borrow from the universal banks should be most concerned with the loans investment policy and techniques. The concept profit making activity of a universal bank is making loan available to its customers. It faces uncertainties and therefore risk of many kinds. A bank does not consider earning alone instead it seeks some optimum combination of earning; liquidity and safely.

For example to gather higher earnings, a bank has to increase more risk and liquidity and vice versa. However, universal banks are limited in their ability to assure risks because of the very high ratio of their liability to their total assets.

1.1 BACKGROUND OF THE STUDY

Commercial banking in Nigeria into the nineteenth century started as a means to facilitate the slipping business of a British shipping line Elder Dempster agencies operating in the Nigeria territory. The chairman of the company, Mr. Alfred Jones perceiving the advantages that were acquirable, and its agents in Nigeria Mr. George William Neville to establish a bank in Lagos.

This was how the First Bank of Nigeria Plc was opened in Lagos in 1894.

1.2 STATEMENT OF THE PROBLEM

Liquidity and credit management have implication on bank profitability and the authorities’ depositors and shareholders. It could trigger off mass cash withdrawal thus plunging the bank into deeper crisis. In analyzing the credit and liquidity management of First Bank of Nigeria Plc, I shall examine its assets quality, which includes its performing and non – performing loans. In addition efforts would be made to look into the bank’s capital adequacy ratio and its shocks of risk assets different measures of liquidity and solvency.

1.3 RESEARCH HYPOTHESIS

The following hypothesis is developed and tasked to ensure a more effective and result oriented research work.

Hi: the liquidity of universal banks could be determined efficiently from the effectiveness of its credit management.

Ho: the liquidity of a universal bank could not be determined efficiently from the effectiveness of its credit management.

Hi: lending and investment operations of universal banks depend widely and extensively on its liquidity.

Ho: Lending and investment operations of universal bank does not depend widely and extensively on its liquidity.

1.4 THE PURPOSE OF THE STUDY

A bank is considered liquid it has sufficient cash and other liquid assets in its portfolio together with the ability to raise fund quickly from other sources to enable it meet its payment obligations and financial commitment in a timely manner, therefore the main purpose is to highlight how liquidity and credit management in this Nigeria Banking Industry is being discovered and the extent to which First Bank of Nigeria Plc is guided in the management of its lending functions.

1.5 SCOPE OR DELIMITATION OF THE STUDY

Universal banks act as intermediaries by collecting deposits and paying interest on them and granting loan charging the borrowers interest at the higher rate. Improving these services to borrowers and the depositors the main goal of the bank is to make profit. Apart from granting loans bank also generate profit on investments. In order to maximize their earnings every bank attempts to structure its assets and liabilities such a manner as to yield the highest returns, subject to some constraints.

A bank is considered liquid if it has sufficient cash and other liquid assets in its portfolio, together with the ability to raise fund quickly from other sources to enable. It meets its payment obligation and financial commitments in a timely manner. This study therefore aims to cover the extent to which First Bank of Nigeria, Plc is guided by the above enumerated theories in t he management of it lending functions and know now it has been able to survive over years in spite of the global liquidity problems to supplement his effort the lending practices and procedure of the bank will also be evaluated.

1.6 LIMITATIONS OF THE STUDY

The research was faced with many problems in the course of collecting information relating to this project, as many staff is not willing to divulge related information. The directions at various departments dealing with credit management and liquidity in first bank refuse to disclose detail information relating to liquidity and credit management. Access to departmental ledger account was denied through verbal information relating to questions, asked was given another limitation was the inability to cover various branches of Nigerian banks, which are throughout the federation. This was mainly due to the financial and logistical difficulties that such exercise of this would entail.

1.7 THE SIGNIFICANCE OF THE STUDY

Liquidity is defined in its broadest sense as the ability to meet cash quickly and at a reasonable cost. Credit management is the way universal bank, lend money out to borrowers. However, this study tends to reveal the problems that one involved in the liquidity is essentially that of having sufficient fund to meet at all times this demand of money that may be made on a bank. Bank must be maintain adequate liquidity in order to provided for and line in deposit for and other liabilities, to satisfy unforeseen increased investment in particular desirable earning assets when such opportunities arises the liquidity requirement of any bank out of the bank. It is the responsibility of management to measure these requirements and to anticipate them on a current and continuous manner.   

1.8 DEFINITION OF TERMS

Functions of universal banks the services offered by universal banks are numerous and they include;

a. Mobilization of savings: - universal banks perform a very important function to all sectors of the economy by providing facilities for the mobilization of savings and making the available for investing purpose by the process of granting credit facilities to other customers. In this may those funds are made available to business to enable them expand their productivity capacity and to individuals and household to facilitate consumptions.

b. Extension of credit facilities:- According to read (1984). He establish that the primary function of universal banks is the extension of credit to commuting borrowers. In making credit available, universal banks are rendering great social service through their actions production is increased capital investments are expanded and higher standard of living is realized.

Banks make it possible for industries to produces a larger quantity of goods, which may remain the stock as inventory before eventually being sold or reprocessed into another from. A good example is the food industry where the quantity produced may be far in express of what can be consume immediately.

c. Transfer of fund:- universal banks serve as medium for transfer funds they facilitates payment by enabling business, government and consumers to transact without cash, cheques and credit cards which are used for bulk purchases as measured by naira amount of transaction cheques drawn and deposited at the bank merely indicated transfer of fund from one account to the other.

d. Creating money:- universal banks create money used to expand productive facilities otherwise there would be a short down of economic activity generally as business would be forced to wait until sufficient profits are made before they could expand. However, the money create activity of universal banks is kept under the control by the monetary to ensure that it is not excessive.

e. International trade services:- all universal banks are involved in the financial aspect of international  trade and services required supporting this important part of the country’s economy, such include bill for collection, documentary credit and open account which are investment used in import and export trade.

.

LIQUIDITY AND CREDIT MANAGEEMNT IN NIGERIA BANKING AND IDNSUTRY (A CASE STUDY OF IFELODUN MICROFINANCE BANK, IKIRUN)



TYPE IN YOUR TOPIC AND CLICK SEARCH.






RESEARCHWAP.ORG

Researchwap.org is an online repository for free project topics and research materials, articles and custom writing of research works. We’re an online resource centre that provides a vast database for students to access numerous research project topics and materials. Researchwap.org guides and assist Postgraduate, Undergraduate and Final Year Students with well researched and quality project topics, topic ideas, research guides and project materials. We’re reliable and trustworthy, and we really understand what is called “time factor”, that is why we’ve simplified the process so that students can get their research projects ready on time. Our platform provides more educational services, such as hiring a writer, research analysis, and software for computer science research and we also seriously adhere to a timely delivery.

TESTIMONIES FROM OUR CLIENTS


Please feel free to carefully review some written and captured responses from our satisfied clients.

  • "Exceptionally outstanding. Highly recommend for all who wish to have effective and excellent project defence. Easily Accessable, Affordable, Effective and effective."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "I saw this website on facebook page and I did not even bother since I was in a hurry to complete my project. But I am totally amazed that when I visited the website and saw the topic I was looking for and I decided to give a try and now I have received it within an hour after ordering the material. Am grateful guys!"

    Hilary Yusuf, United States International University Africa, Nairobi, Kenya.
  • "Researchwap.org is a website I recommend to all student and researchers within and outside the country. The web owners are doing great job and I appreciate them for that. Once again, thank you very much "researchwap.org" and God bless you and your business! ."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "Great User Experience, Nice flows and Superb functionalities.The app is indeed a great tech innovation for greasing the wheels of final year, research and other pedagogical related project works. A trial would definitely convince you."

    Lamilare Valentine, Kwame Nkrumah University, Kumasi, Ghana.
  • "I love what you guys are doing, your material guided me well through my research. Thank you for helping me achieve academic success."

    Sampson, University of Nigeria, Nsukka.
  • "researchwap.com is God-sent! I got good grades in my seminar and project with the help of your service, thank you soooooo much."

    Cynthia, Akwa Ibom State University .
  • "Sorry, it was in my spam folder all along, I should have looked it up properly first. Please keep up the good work, your team is quite commited. Am grateful...I will certainly refer my friends too."

    Elizabeth, Obafemi Awolowo University
  • "Am happy the defense went well, thanks to your articles. I may not be able to express how grateful I am for all your assistance, but on my honour, I owe you guys a good number of referrals. Thank you once again."

    Ali Olanrewaju, Lagos State University.
  • "My Dear Researchwap, initially I never believed one can actually do honest business transactions with Nigerians online until i stumbled into your website. You have broken a new legacy of record as far as am concerned. Keep up the good work!"

    Willie Ekereobong, University of Port Harcourt.
  • "WOW, SO IT'S TRUE??!! I can't believe I got this quality work for just 3k...I thought it was scam ooo. I wouldn't mind if it goes for over 5k, its worth it. Thank you!"

    Theressa, Igbinedion University.
  • "I did not see my project topic on your website so I decided to call your customer care number, the attention I got was epic! I got help from the beginning to the end of my project in just 3 days, they even taught me how to defend my project and I got a 'B' at the end. Thank you so much researchwap.com, infact, I owe my graduating well today to you guys...."

    Joseph, Abia state Polytechnic.
  • "My friend told me about ResearchWap website, I doubted her until I saw her receive her full project in less than 15 miniutes, I tried mine too and got it same, right now, am telling everyone in my school about researchwap.com, no one has to suffer any more writing their project. Thank you for making life easy for me and my fellow students... Keep up the good work"

    Christiana, Landmark University .
  • "I wish I knew you guys when I wrote my first degree project, it took so much time and effort then. Now, with just a click of a button, I got my complete project in less than 15 minutes. You guys are too amazing!."

    Musa, Federal University of Technology Minna
  • "I was scared at first when I saw your website but I decided to risk my last 3k and surprisingly I got my complete project in my email box instantly. This is so nice!!!."

    Ali Obafemi, Ibrahim Badamasi Babangida University, Niger State.
  • To contribute to our success story, send us a feedback or please kindly call 2348037664978.
    Then your comment and contact will be published here also with your consent.

    Thank you for choosing researchwap.com.