IMPACT OF BANKS CREDIT IN THE NIGERIA ECONOMY
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IMPACT OF BANKS CREDIT IN THE NIGERIA ECONOMY
ABSTRACT
This study examines the influence of bank credit on the Nigerian economy using the case studies of First Bank Plc and Zenith Bank Plc Ekwulobia. The study’s objectives include determining the extent to which various banks’ credits have been felt in the Nigerian economy,
accessing the level of knowledge of the various credit facilities provided by banks in the Nigerian economy, determining the response of the various businesses existing in the various sectors of the economy to bank’s credits, and reviewing the impact of the central bank of Nigeria’s (CBN) monetary policy on the banks.
The technique revealed the relevant literature, and data were obtained via questionnaire and personal interview. According to the findings, the examination of bank loans has a significant impact on the country’s economic growth and development, among other things. As a result, the researcher found that bank credits have had a significant impact on the Nigerian economy.
Long-term credit facilities should be encouraged to aid capital formation of businesses because it is the main instrument for economic growth and development; monetary authorities should also consider bank activities when using the central bank’s monetary policies to achieve growth and development in the country.
CHAPTER ONE INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Credit has been identified as an important element for supporting growth and development in Nigeria. Approximately 70% of the population works in the informal economy or in agriculture.
The federal and state governments of Nigeria have recognised that financial empowerment of both urban and rural areas in the economy is critical for sustainable growth and development in Nigeria, as they are the repository of both the predominantly poor in society and, in particular, small and medium-sized enterprises.
Positive multipliers will be felt throughout the economy if this growth strategy is implemented and the latent entrepreneurial capabilities of this significant part of the population are suitably stimulated and sustained.
To give effect to this aspiration, the federal government has implemented various policies over time to improve agricultural production capabilities, positivity, and channel the potential of Smts to improve their standard of living, and to place the sector at the forefront of government development strategy.
The examination of bank credit in the Nigerian economy can be considered to have a significant impact on the country’s economic growth and development, to the degree that if there were no banks, the activities of economic growth and development would be impossible. Banks play a vital part in any country’s economy.
The health of the economy is inextricably linked to the strength of its banking sector. Although banks do not produce new wealth through lending, borrowing, and other activities that facilitate the process of wealth production, trade, and communication.
Modern banks are particularly useful for utilising the country’s resources nowadays. Banks’ effects have been felt by numerous areas of the economy. Banks, in fact, are like the heart in the Nigerian economy structure,
and it credit products, the organs will remain sound and healthy in the blood if it is not supplied to any organ, the organ will remain useless, so it also relates to the Nigerian economy, if banks credit are not provided to the various sectors of the Nigerian economy such as Agricultural sector, Industrial sector, et cetera, the various sectors will be useless.
Bank credit facilities serve as an incentive for producers and manufacturers to improve their output. The function of Nigerian banks in providing medium/intermediate finance, long-term finance, and permanent finance. Credit facilities offered by banks are critical to the country’s economic success.
1.2 STATEMENT OF THE PROBLEM
The following issues needed this research. This includes the following:
The banks’ low credit facilities to various sectors of the Nigerian economy.
Inadequate understanding of the numerous credit options offered by banks in the Nigerian economy.
The low response rate of various businesses in Nigeria’s diverse sectors to bank lending facilities.
The bank’s restricting effects of the Central Bank of Nigeria’s (CBN) monetary policy.
1.3 OBJECTIVES OF THE STUDY
The following are the objectives of this research:
To ascertain the extent to which various bank credits have impacted the Nigerian economy.
To gain access to the level of information about the various credit facilities offered by banks in the Nigerian economy.
To ascertain the reaction of various businesses in various sectors of the economy to bank lending facilities.
To examine the effects of the Nigerian Central Bank’s (CBN) monetary policy on banks.
1.4 RESEARCH QUESTIONS.
(i) Does the diverse bank credit have an impact on the Nigerian economy?
(ii) Is there appropriate awareness of the various loan facilities offered by the sector’s banks?
(iii) What is the level of responsiveness of various businesses in various sectors of the economy to lending facilities from banks?
(iv)Has the CBN’s monetary policy sufficiently encouraged banks to extend credit?
1.5 SIGNIFICANCE OF THE STUDY
This research will be extremely beneficial to all sectors of Nigeria’s economy. This is because no sector of the Nigerian economy can function without appropriate credit from banks.
Government:This research will be crucial to the government in order for her to understand the amount to which bank credit has impacted the economy in order for them to design legislation that will not be damaging to banks and their various facilities, which may in turn damage the economy as a whole.
Academic Institutions: This research is relevant to numerous fields inside the institution, such as banking and finance, business management, and so on.
Borrowers and bank customers: This research will also aid those who require credit facilities from banks in gaining enough information of how the bank might support them in capital formation.
Subsequent Researchers: It will be extremely beneficial to the department’s students in terms of their research projects. Finally, it would contribute to the citizens’ existing knowledge of the influence of bank credit in the Nigerian economy.
1.6 SCOPE OF THE STUDY
Despite the fact that bank credit has a significant impact on economic development.This study will primarily examine the influence of bank credits in Nigeria on the Nigerian economy, with a focus on First Bank Plc and Zenith Bank Plc in Ekwulobia, Anambra State. The scope was chosen since it would be too large to analyse all of Nigeria’s banks.
1.7 DEFINITION OF TERMS
Banks: A bank is an organisation that provides various financial services such as the storage of valuables, the storage and lending of money to customers, subject to the requirement of honouring cheques drawn on them from time to time by the consumers. E t c.
Credit is money borrowed from a financial institution like a bank.
Economy: This term refers to the relationship between a country’s output, trade, and money supply.
Short-term finance refers to bank loans made to consumers with the intention of being repaid within a year.
Long-term financing refers to funds that stay in business for a duration of ten years or more.
Medium-term finance refers to funds borrowed for a period of 5 to 10 years, such as leasing and installment credit facilities like credit sales and hire purchase.
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