DOMESTIC BUNK LENDING AND ITS EXISECTS IN THE NIGERIA ECONOMY
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DOMESTIC BUNK LENDING AND ITS EXISECTS IN THE NIGERIA ECONOMY
ABSTRACT OF DOMESTIC BUNK LENDING AND ITS EXISECTS IN THE ECONOMY OF NIGERIA
This project work was undertaken to bring to light some of the challenges encountered by banks, as well as to indicate to their clients how such concerns will be addressed and resolved.
We may learn from this research that one of the biggest issues encountered by banks in guiding loan payback. Borrowers, particularly small-scale farmers tucked away in isolated areas, act as if the loans they received are “their share of the national cake,” and they make no move to repay their loans.
Because this was an analytical research endeavour, secondary sources were primarily utilised. The data obtained from CBN regulations, newspaper articles, and annual reports from some of the banks.
My research shows that most banks give short-term loans, and they also consider the bank to prevent their statement of accounts if they do not have an account with the bank to prevent a guarantor who will return the loan if the customer is unable to meet all of their conditions.
I recommend that the federal government give the banks a little more leeway when it comes to credit guidelines because the central bank of Nigeria does not always take into account the loan demand situation in the areas where various banks are located or the economic situation in which some banks hardly get customers.
INTRODUCTION TO CHAPTER ONE OF DOMESTIC BUNK LENDING AND ITS EXISECTS IN THE NIGERIA ECONOMY
BACKGROUND OF THE STUDY
Domestic bank lending highlights issues that banks face when lending to their customers; these statements report a bank’s lending policy at a specific time,
the bank’s activities and resulting profit or loss during the most recent period, and the flow of resources occurring within the bank during the same period.
Furthermore, the central bank of Nigeria will benefit from this because they will need to change their already established lending guidelines. The central bank of Nigeria usually requires a minimum lending to earn sector,
but merchant bank loans are primarily to manufacturing sectors, and they are unable to expand loans to these sectors due to CBN restrictive guidelines.
Before loans are granted under corporate impartment, the purpose of the loan must be stated, financial information must be used, and adequate export will be made to increase collateral offered by borrowers.
Domestic bank lending includes commercial banks, merchant banks, and development banks. In the case of commercial banks, potential borrowers were required to have a substantial quantity of money in their accounts before they could borrow money from them. All of this contributed significantly to the difficulties in domestic bank lending.
1.1 STATEMENT OF THE PROBLEM
The period we experienced in decline in terms of economic activity in Nigeria due to the oil glut, this period witnessed diminishing oil revenue, factory closings, a showdown on investment security, and retrenchment.
During this time, the government was involved in a number of steps to revitalise the economy, with the majority of its policies being implemented through domestic banks.
Because of the overall drop in economic activity, the level of domestic output, which had improved marginally in 1979, stagnated in their was a decrease in the money supply, but bank credit climbed by 1.408.3 million, a 16.6% increase over 1989.
In 1990, development was disappointing, with industrial production filling quickly due to a surplus, but agricultural improved by 3.4%, with credit by banks increasing by 50.8% to 10, 2685.5 million, the factor being credit expansion to the government.
In 1992, there was a steady fall in output compared to 1991, with minimum bank credit increasing from 34.7% to 21.899.7 million, carried primarily by commercial banks, whose loans and advances to the private sector climbed to 10, 453.5 million.
The economy was in shambles in 1993. Agriculture has declined due to natural disasters, which have mostly affected all sectors. Industry has fallen, pectoris has closed down, crude oil output has decreased further, building has decreased, while bank credit has climbed by 50% to 5.5 million.
There was no substantial change from 1993 data in 1994; the steady decrease and government actions remained. Were they essentially the same?
In 1995, the economy entered a downturn, but GDP increased by 2.4%, compared to the 93/94 drop, where there was a full increase in bank credit of 4.9% compared to 10.5%. Lending was low at first, but increased to 32.7 billion in July.
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