Appraisal Of Money Deposit Banks Investment And Lending Activities In Nigeria (A Case Study Of UBA And Zenith Bank Plc 2006-2015)
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This thesis is dedicated to the Almighty God, my husband and my children.
I wish to acknowledge the efforts of my supervisor, Prof. B. E. B. Nwoke for supervising this work. My special thanks go to Dr. A. A. Amaechi who painstakingly read through this work, made corrections and constructive criticisms, and for all his encouragements through thick and thin. I am sincerely grateful, Sir.
I am also grateful to my Head of Department, Assoc. Prof. C. M. U. Ajaero for all his encouragement. To my Head of Department Emeritus, Prof. C. N. Ukaga, I wish to say thank you for all your motherly advice and encouragement throughout this programme. My knowing has taken me to greater height. I would not fail to appreciate all my lecturers, Prof. Keke, Prof P. I. Onyeka, Dr. Mrs. Ogoamaka, Dr. Mrs. C. Ikpeama and Dr. Mrs. M. Ezike.
I am most indebted to my heartthrob, Mr. Chris Ononogbo for his consistent encouragement and support, both morally and financially; who gingered me on to work assiduously to make sure that this dream is actualized. To my lovely children, Chidera, Onyinyechi, Ugochi, Chinwendu, Chizaram and Chiziterem, am most grateful. To my siblings, I say thank you.
My thanks also goes to Nwakire Chibuike and all the other laboratory technicians for their wonderful assistance and co-operation. To all the families and individuals who agreed to serve as the subjects for this research, I am grateful. Mr. Emma Okpara, who took the pains of typesetting this work, I am grateful. Evang. Ifeanyi Okoroafor and L/R Chibueze, Iheanacho, thanks for all your prayers.
Above all, I am grateful to God Almighty who made it possible for me to withstand the rigors in the production of this work.
This research project was centered on appraising commercial banks lending and investment activities and policies in Nigeria as a developing economy using United Bank for Africa PLC (UBA) as a case study.The overriding objectives were-To ascertain the level of reconciliation between profit maximization objectives and adequate liquidity. To ascertain the relationship that exists between deposit level and profit level.
To ascertain the effect of monetary and fiscal policies on lending ability of commercial banks Primary and secondary method of data collection was used in obtaining relevant information used in writing this Seminar Work Conclusion and practical suggestion was made based on the findings of the data collection and analyzed.
Table Of Content
- Title page
- Approval page
- Table of content
- 1.0 Introduction
- 1.1 General overview of the study
- 1.2 Statement of Problem
- 1.3 Objective of the study
- 1.4 Research Questions
- 1.5 Statement of hypothesis
- 1.6 Significant of the study
- 1.7 Scope of the study
- 1.8 Limitation of the study
- 1.9 Definition of terms
- 2.0 Literature Review
- 2.1 Introduction
- 2.2 Nature and Structure of Investment and lending in Nigeria Banks
- 2.3 Investment and lending activities of United Banks of Africa (UBA)
- 2.4 Monetary policies and how it affects the lending activities of commercial banks
- 2.5 Analysis of the impact of the banking sector lending and investment activities to the economy
- 2.6 Loan administration and management in UBA
- 2.7 The role of information technology in the lending and investment activities of UBA
- 3.0 Research designed and methodology
- 3.1 Introduction
- 3.2 Research designed
- 3.3 Sources/method of data collection
- 3.4 Population and sample size
- 3.5 Sample techniques
- 3.6 Validity and reliability of measuring instrument
- 3.7 Method of data analysis
- 4.0 Presentation and analysis of data
- 4.1 Introduction
- 4.2 Presentation of data
- 4.3 Analysis of data
- 4.4 Test of hypothesis
- 4.5 Interpretation of results
- 5.0 Summary, conclusion and recommendation
- 5.1 Summary of finding
- 5.2 Conclusion
- 5.3 Recommendations
1.1 Background Of The Study
Banking all over the world has a fundamental nature which is risk taking and intermediation between the surplus and deficits unit of the economy. However, its main business is maturity transformation which is designed as borrowing long and lending short. This enable them meet her financial obligation as they manage their affairs prudently.
Management of their affairs is centrally based on management of their lending and investment activities to ensure adequate liquidity and maximize profit. Lending is the highest earning asset in banks balance sheet that contributes materially to the banks achievement and fulfillment of the objectives of profitability by providing a highest return than other financial assets.
It also helps management to satisfy the legal and other regulatory objectives of monetary authorities. It is vehicle through which bank management attempts to satisfy the credit needs of the community the bank serve or intend to serve.
Lending activities although being the highest earning asset to the bank is also the most illiquid and most risky of banks operation.
Apart from these, lending as an important aspect of banking and one of the cardinal principles of classical banking is to ensure effective lending, which is to maximize profitability and ensure adequate liquidity.
A policy according to Raden (1987) is a plan of action statement of ideals etc issued or adopted by government, political, party, business etc. These form the principles that govern the people in an organization.
The central bank of Nigeria exercise control over commercial bank by means of monetary policy instruments. Regulatory and credit control powers are conferred on the CBN y the act establishing it.
Monetary policy equally has to do with the manipulation of aggregate demand in the economy by regulating the money supply through the use of monetary policy instruments. Such monetary policy instruments which enable the CBN to control the lending activities of commercial banks include the following:
- Use of bank rate
- Use of selective credit control
- Moral suasion
- Loan ceilings
- Use of formal directives
However, such bank’s view runs contrary to the demand of a developing environment which demands that banks lending objectives should incorporate contributions to the development of the environment in which they operate. Thus problem facing banking activities in developing economy like ours need to be resolved to ensure a conducive environment for the banks operation as well as to avoid crises . Kanu (2003:2).
In addition to other segment of bank activities, they invest in all form of government, private and corporate securities so as to increase the level of economic activities in a given economy as well as to increase profit.
Undoubtedly, banks have as their objectives the desire to survive, to make profit and grow. In attempt to achieve these objectives, a bank has to manage its lending and investment activities well to have adequate cash on hand to meet the withdrawal need of her depositors, contribute to the development of the environment in which they operate and as well make profit for their owners.
1.2 Statement Of Problem
Bank lending and investment activities intend to enhance the development of the economy (especially in a developing nation like Nigeria) and also achieve a trade off between liquidity and profitability. These objectives can only be realized if the loan and investment portfolio are efficiently and effectively managed.
But the problem is this; can credit management in our commercial bank actually safeguard the banking system in Nigeria after against distressed and protect depositors interest?
- How best can they access their customers to guide against the result of default in repayment of loans and advances?
- Has banks been able to reconcile between liquidity and profitability objectives through their credit and investment management?
1.3 Objective Of The Study
Commercial banks promote economic growth and development through their lending and investment activities.
- This study therefore intends to review the extent to which the Nigeria Commercial bank has contributed to the economic growth through lending and investment.
- Ascertain how effective their lending activities have been in regards to reconciling the dual objective.
- To investigate the lending procedure of its United Bank for Africa (UBA) and identify the nature of investment they undertakes.
- To review the extent to which deposits nature affects lending activities in UBA
- To ascertain the effect of monetary policies on banks lending ability.
1.4 Research Questions
- Has bank been able to reconcile between liquidity and profitability through their credit and investment management?
- Has lending activities by money deposit banks help to increase the economic growth and development in Nigeria.?
- Does deposits position and nature affects your investment and lending operations?
- Do lending operation contribute about 50% of the profit level of your bank?
1.5 Statement Of Hypothesis
- H1: Lending activities by money deposit banks help to increase the economic growth and development in Nigeria.
- H2: Has bank been able to reconcile between liquidity and profitability through their credit and investment management.
1.6 Significance Of The Study
It is hoped that when this study is completed, the findings and results from it will add to the existing stock of knowledge on the subject. It will also help in understanding how bank can enhance their credit management in order to improve their performance in the area of creating confidence in the depositors and as well make profit for their share holders.
It will also help borrowers to understand the effect of overdraft and the interest charges, commitment fees, appraisal fees, prime rate etc on loan accounts.
1.7 Scope Of The Study
This study work will concern itself with the investment and lending activities and policies of UBA and effects of Central Bank of Nigeria monetary policies on their lending activities.
It will go further to ascertain the effect of nature of deposits and level of withdrawal on lending and investment activities and policies of UBA.
1.8 Limitation Of The Study
Some of the limitations or constraints faced while writing this project are:
The researcher being a student had time between the research work and other courses which demand her attention and this time factor affects me so much.
I have insufficient finance and they affect me so much that I didn’t cover the areas I suppose to cover in the course of this study in order to bring out more information.
Also some of the literature that would have been very useful in the work was not purchase because the researcher was financially incapacitated.
1.9 Definition Of Terms
It is a promise to pay, issued under seal by a firm, corporation or government bodies to borrow long term funds which pays interest semi-annually and matures on face value.
This is a loan of money given to a borrower on an agreed credit term and its maturity period variances.
3. Credit Guidelines:
These are CBN guidelines that guide the operations of commercial banks in the economy.
4. Credit Management:
This is the maximization of the value of an organization by achieving a trade off between liquidity and profitability
It is a secondary source of repayment which only plays a role on the occurrence of unexpected to the condition of the loan
This is the type of economy where the allocation of resources is determined by the market forces.
7. Dual Conflict Objective:
This refers to two objective of an organization that variance to each other except on a compromise ground and for this work, this word refers to profitability and liquidity objectives of the bank.
This is selling a company’s debt to a factor company at a discount and the factor upon collection of the full amount takes the different as his profit.
This is the commitment of finance resources in acquisition of asset with the expectation of future benefit.
Bank lending is the transfer of resources of the bank to various economic units of the economy through loan, overdraft, discounting of bills.
11. Minimal Level:
This is the lending ceiling which commercial banks are restricted from exceeding by CBN credit guidelines.
12. Modus Operandi:
This is used in this work to mean the mode of operation.
This is the conveyance of a legal or equitable interest in property to any person with the provision of redemption on the repayment of the loan or the performance of some other obligation.
14. Nature Of Deposits:
This refers to the structure of deposit which includes demand deposits that is unstable, saving and time deposits that is none stable than demand deposits.
This is the right or interest in property which is given to a lender (creditor) by a borrower for the purpose of providing cushion on which the lender may fall back in case the borrower default in payment.
16. Prime Rate:
This is rate at which bank extend loan to their credit worthy customers.
17. Term Loan:
This is consumer or industrial loan with an original maturity of more than one year.
This is a person(s) who is chosen by a court of law to be in charge of a company or person that is bankrupt.
20 Recovery Procedure:
This is the collective effort made to recover money customers owned to the bank.
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How to nail it on the head during your project defence
You are through with writing that project. Now what?
You have found yourself at that point where you have to defend what you have written. Of course you have to stand in front of your supervisor and other literary personalities to prove that you know what you wrote in your project paper. Unfortunately, the more you think about it, the more it looks like you are about to face a legion. It is not a war. But the emotion of dread welling up inside of you makes it look like one. So now you are asking yourself questions.
- How am I going to start?
- I hope I will do well enough to get an A.
You really want to nail it, but you need to come to terms with exactly how to get everything in perfect control. Especially your emotions of fear that seem to make a wreck of you every time you think about public speaking.
So here is the deal. I want to help you avoid that feeling that would ruin your precious moment if you dare to let it. And we are going to do it together.
I am going to highlight some very important tips to help you get in control for you to be comfortable enough to move from that feeling of DREAD to CONFIDENT; and making an awesome Impression for that great rating your supervisors should be giving to you so freely.
Consider these tips as you prepare for your defence. We will be taking them one after the other so here we go.
Watch Your Body Language And Keep It Confident:
Can you tell that a person is falling apart if they look confident? … If I can second guess you rightly, am sure you answered no to that question. Remind yourself that you need to come out that way. Now this might seem like a huge big deal when you are dealing with the foreboding. Maintaining a poise of confidence is very important. So find your most comfortable position, sitting or standing and draw up your body. You must exude confidence. It is something you need to do for yourself. People can only see what you allow your body language to show. So you must endeavour to put that out. Remember the story of David and Goliath? … At the end of your defence day, you want to be David.
Dress In Your Most Comfortable And Impressive:
Am sure this one is a no brainer. However I must highlight that you choose comfortable pieces. You don’t want to look so good and yet look like you were forced to wear something that does not belong to you. It’s great to ensure that as impressive as your clothes are on you, that they are also very comfortable.
Speak With Authority:
Going hand to hand with that aura of confidence is your most powerful asset:your words. If you look that confident, your words must not come out like whimpers. To be able to pull this off, you definitely need to speak as deliberately as possible in expressing yourself. Let them also hear what they see.
Use, Your Gestures:
I have often found this to come to my rescue in dealing with shyness and conveying my confidence. Usually it gives you an edge to also drive home your point. You must, however, ensure that you do not over use it. It doesn’t mean that your hands should be flying all over the place. That would be absolutely unnecessary. If you do this well, after a while you will realize that you are not as self-conscious as you used to be at the very start. For most situations, it would have completely disappeared altogether; leaving a really confident you talking.
Have A Good Opening And Closing Line:
Make sure you have perfected a good opening line. You should also be armed with a good closing line too. Try and rehearse it to a friend. If for the first time you presented it, your friend does not say “wow, that’s beautiful” or something like that; just know you need to keep refining it until you get the perfect line. Both opening and closing lines will go a long way in how impressed your panel gets to rate you high.
Make Sure You Know Your Work:
Certainly you should understand how important it is to know your own work from start to finish. Not having in-depth knowledge of your own work is tantamount to a suicide mission. Why should you kill yourself?
When all is said and done, this is what you came to defend in the first place. You should know your work from A to Z.
Prepare For The Questions:
Now this part is truly essential. You must be sure you do not floor all the good work you did on your presentation by not answering correctly. You must pay attention to the questions you are asked to be sure you will give the right answer. Many people get it wrong at this stage and spoil their good presentation. When you do not understand any question do endeavour to ask the person to expatiate what they mean before you answer.
These tips are by no means exhaustive, but applying these tips will give you some necessary advantage you need for a great outcome. Of course that outcome would mean that you eventually earn all your points on this project.
The structure of a good project work
Undergraduate projects in Nigeria is a prerequisite for graduation amongst Nigerian tertiary students who will which to obtain bachelors degree in their respective courses of study such as accounting, banking and finance, business administration and a host of others. Writing an undergraduate project in Nigeria for final year students entails a lot both financially and otherwise. Being able to develop any final year project depends on getting a researchable topic whether it is Accounting Undergraduate project topics, Banking and Finance research topics or banking and finance project topics and materials and it all requires diligent hard work of students who are willing to develop best undergraduate projects in Nigeria and graduate in flying colors.
A typical Undergraduate project in Nigerian tertiary institutions can be said to be divided into five or six chapters depending on the format of the school and course of study which are
The introduction of an undergraduate project states the main research problem and research argument. What precisely the study is all about and why it is important. It looks at the originality of the research work and how it will fill the gap in other studies. Justification for a research undergraduate topic should not be lengthy before it has been explicitly stated.
Below are the contents in chapter one of an undergraduate research project which includes;
- Background of the study,
- Statement of the problem,
- Objectives or aims of the study,
- The research questions,
- Research hypothesis,
- Significance of the study,
- Scope of the study,
- Limitations of the study and
- Operational definition of terms.
2. Literature review
Literature review of any undergraduate research work, be it business administration project topics or Economics project topics just to mention a few is very critical to securing a high grade in one’s project work. The literature review of a research process uncovers what other writers have written about the student’s topic. A student’s undergraduate research work should include a discussion or review of what is known about the subject and how that knowledge was acquired. The review could conclude with a brief summary of the literature and its implications. The contents of the literature review are the theoretical review, conceptual framework, empirical review and summary of literature review.
3. Research Methodology
This section includes a description of the research methods used in the undergraduate research work such as the sample size, data collection methods, measurement instruments, research data analysis procedures and the population from which the sample was selected. This section also describes the method used in selecting the sample or samples, validation and reliability of the instruments used in the research work. There are different research statistical techniques used in undergraduate research work such as SPSS, e-views etc.
4. Results & Discussion
This section presents and discusses the data analysis results used in an undergraduate research work, the results of each analysis is being summarized, tabulated, and then discussed for each research question. Then for each research hypothesis, the statistical test of significance selected and applied to the data is briefly described, followed by a statement indicating whether the hypothesis was supported or not supported. In presenting the result analyses/summary in an undergraduate project tables and figures and or graph are used to add clarity to the presentation.
5. Summary, Conclusions And Recommendations
This section summarizes the findings of the study in an easy to understand manner. It also explains the practical implications of those findings, and points to recommended directions for future research in that area.
This is where every source cited in the undergraduate research work is being included. Every undergraduate research work must be properly referenced for its authenticity.
Choosing A Good Project / Research Topic
Students in Nigerian universities these days wish to choose a very simple project topic/material. There is no issue choosing a simple project topic; the only problem is your ability to choose a good project or research topic that your supervisor will easily approve for you.
Most project supervisors really want to see how good his or her project student understands his or her surrounding through the kind of topic he or she chooses for their project work.
There are some project topic that are not reject-able; for instance in Nigeria of today; what do you think is the major issue on ground now?
If a project student can choose or craft a topic on the effect of dollar increment on the economy of Nigeria. Such project topic will be very interesting to write on.
Now what are the qualities of a good project topic?
- The materials for the project topic must be easily assessable.
- The project topic itself must be meaningful.
- The variables must be able to give a clear aim of the project topic.
What do I mean by variable?
Well I am deriving my point from the area of ; the variables here are those main words in the project topic.
Like the above project topic; the effect of dollar increment on the economy of Nigeria. You can see the main variables that really define this project topic are:dollar, increment and economy.
Before you present your topic to your project supervisor, first of all understand your project topic, and then secondly try to do some research for your topic to see if at least you can get up to 60% of what you need to write the complete project.
I said that above because you might have a very nice topic that the materials are not available online and there are no books as regard the topic; in this case the project topic becomes difficult for you even though the topic is catchy.
What do I mean by your topic being assessable?
Well what I mean is very simple and easy to understand. Simply pick your project topic, type it on google and see if you will have at least a good background for the topic you are writing on.
If you can have a good background for your project topic and you can understand the problem associated with the project topic, then I believe the aim of the project is not far-fetched.