Loan Losses In Commercial Bank Lending A Comparative Study Of Government Controlled And Private Banks

Project and Seminar Material for Accountancy / Accounting

Project and Seminar Material for Accountancy / Accounting


With the unprecedented display of interest in the banking business in the wake of structural adjustment programme, the fear of imminent bank failures as a result of anticipated down turn in the fortunes of banks has remained lightened.

This down turn in fortunes of mainly attribute able to one factor that has always assured greatest currency in discussions of problems of banking in Nigeria, that is loan losses.

While the loan loss issue remains unassailable, the argument in most circles is that the loss profile is higher in the government owned or controlled commercial banks than in the privately owned banks.

It is against the background of these lightened developments that this study attempts in examination of the post SAP loss phenomenon and particularly make a comparative study of the private and government controlled commercial banks.

The study which used representative banks is therefore an appropriate attempts to draw some important conclusions backed up with empirical analysis. The study mainly helied on historical approach and was partially descriptive in pinpointing the present problems or issues in lending and loan management. Data was generated from the historical recors as well as the questionnair and analyzed using the statistical tool of t-distribution, chi-square and correlation analysis.

Interesting findings were made from the analysis. On a general note, the problems of diversion, excessive emphasis on security. Greater influence of internal organizational considerations (e.g) Loand policy), Lack of continuity of terme, undue pressures, lack of automated loand information system are inherent. Comparatively, it was found out that the role of loan recovery is not higher in the private banks, the rate of provision for loan losses is higher in the government. Controlled banks; the private banks do not emphasis more on security than their government controlled counterparts, the loan to total assets ratio of government controlled banks is not significantly different from the average of the commercial banking sector.

Chapter One

1.0 Introduction

1.1 Background Of The Study

“Neither a borrower nor a lender be” goes the popular saying. Deriving from the above saying is a simplicity that in the lender – borrower relationship, the lender who gives has had to face problems, basic among which is that the borrower might not honour his or her debt obligations.

By virtue of their highly recognizable and incontestable role in the process of engineering economic growth through the lending function, commercial banks are most vulnerable to this non-repayment phenomenon.

In the process of accelerating economic growth in Nigeria, as in other countries, commercial banks have served as most important institutions of resources allocation and financial intermediation between surplus and deficit economic units. However for obvious reasons of low level of capital formation in the country, emphasis of this purveying function is on lending, with its multiplier effect.

A second and consequent issue arises with due considerations to the primary motive of the investors in the banking business. The commercial bank owners desire profit and it is largely through the interest on their loans and advances that is primary profit is satisfied.

Thirdly, besides all the important lending role and profitability consideration commercial banks lending activities demand concrete understanding of the depositors’ position since a good part of their abilities goes into the loan portfolio ie. the liquidity considerations.

The foregoing vividly underscorses the causative role of commercial banks in the process of engineering growth as well as indicating the nature of their relationships with depositors. On the role of commercial banks as growth engineers. ORJI (1989) aptly stated.

“they are much more involved in the development of the economy than any other financial institution. Indeed, they have been and are likely to remain the dominant financial intermediates in Nigeria for they presently account for over 80% of the resources of the financial system, they therefore occupy strategic position in the economy and are more than most other units, able in all events to influence the course of development”.

Roles of resources allocation and profitability the commercial banks commit sizeable audits of their asset portfolio in the form of loans and advances.

1.2 Statement Of Problem

Deriving from the above introductory background is that loan losses among commercial banks have assumed some canker wormic dimension and demands serious “financial diagnosis”. Accordingly, it has therefore attracted the chagrin of keen observers of and commentators on, the financial systems who believe that it is a major problem which present day banks in Nigeria are facing. In fact, of recent “The bad debts in the banking system was estimated at N73 billion (this day of April 24,2005).

However, while there is a general wider standing of high rates of loan losses among the banks, augments in many circles highlight a higher magnitude of the losses among banks wholly owned or substantially controlled by government. This does not go to suggest a situation of no debts among the private banks, but

Loan Losses In Commercial Bank Lending A Comparative Study Of Government Controlled And Private Banks

Project Material Download

3,000 Naira

The Complete Material will be Sent to You in Just 2 Steps

Quick & Simple…

Step One Purchase

Make a Mobile Transfer or POS Payment of ₦3,000 to any of the Account Below

Access Bank PlcAccount No.: 0811003731
Name: Samphina Academy
Account Type: Current
Zenith BankAccount No.: 1225513212
Name: Samphina Academy
Account Type: Current

Or CLICK HERE To Pay With Debit Card

CLICK HERE To Pay With Debit Card ($15)
GHANA – Make Payment of 60 GHS to MTN MoMo, 0553978005, Douglas Osabutey 

Step Two Purchase

Send the Following Details on WhatsApp ( 08143831497) After Payment

  • Payment Details
  • Email Address 
  • Loan Losses In Commercial Bank Lending A Comparative Study Of Government Controlled And Private Banks

The Complete Material Will Be Sent To Your Email Address After Receiving Your Details
T & C Apply

  Contact Our Help Desk

⚠️ Need a different topic? Perform a quick search

Get A Complete Business Plan For Any Business In Nigeria

Business Plan for Businesses in Nigeria

  Business Plans in Nigeria


This research material “Loan Losses In Commercial Bank Lending A Comparative Study Of Government Controlled And Private Banks” is for research purposes and should be used as a guide in developing your research project / seminar work. For no reason should you copy word for word (verbatim) as will not be liable for any who copied the material.

The aim of providing this material is to reduce the stress of moving from one school library to another all in the name of searching for research materials. This service is legal because, all institutions permit their students to read previous projects, books, articles or papers while developing their own works. According to Austin Kleon “All creative work builds on what came before”. is only providing this material “Loan Losses In Commercial Bank Lending A Comparative Study Of Government Controlled And Private Banks” as a reference for your research. The paper should be used as a guide or framework for your own paper. The contents of this paper should be able to help you in generating new ideas and thoughts for your own research. Use it as a guidance purpose only.

Samphina Academy

Samphina Academy is an Online Educational Resource Center that is aimed at providing students with quality information and materials to aid them in succeeding in their academic pursuit.