Nigeria Deposit Money Banks’ Credit Administration and the Incidence of Bad Loans: An Empirical Investigation

70 Pages Posted: 24 Sep 2013

See all articles by Adewale Adegoke Alawiye-Adams

Adewale Adegoke Alawiye-Adams

Afe Babalola University Ado-Ekiti

Babatunde Afolabi

Department of Finance, Federal University Oye Ekiti

Date Written: September 23, 2013

Abstract

The thrust of this study was to empirically investigate Nigeria’s’ Deposit Money Banks’ Credit Administration and the recurring incidence of Bad Loans. The research work critically examined credit Administration in Nigeria’s Deposit Money Banks, the origin and incidence of bad debts, the recoveries of Non Performing Loans and also offered possible way out of their bad credit and investment portfolio management.

The data collected for the study were analyzed using tables, simple percentages and chi-square. A sample of 25 credit officers in each of the four selected banks (Access Bank Plc, First Bank Plc, United Bank of Africa Plc and Wema Bank Plc) were chosen and questionnaires administered on them. Based on the information supplied and the analysis of the data gathered from the questionnaires using the chi-square technique, it was found that the unwillingness of banks’ customers’ to provide adequate information and the failure to carry out detailed assessment of the customers’ loan requests results in bad debt, it was also discovered that inadequate securitization in bank lending has a significant effect on bad debts.

The study therefore recommends amongst other things that proper legal documentation be in put place. This would reduce the losses arising from problem loans and minimise the effects of such loans in the form of bad debt provisions, it also suggested that effective monitoring and evaluation is key to avoid the diversion of facilities for unapproved purposes to reduce or forestall the incidence of bad debts in Nigerian Deposit Money Banks.

Keywords: Nigerian money deposit banks, credit administration, bad loans, bad debts and Incidence

Suggested Citation

Alawiye-Adams, Adewale Adegoke and Afolabi, Babatunde, Nigeria Deposit Money Banks’ Credit Administration and the Incidence of Bad Loans: An Empirical Investigation (September 23, 2013). Available at SSRN: https://ssrn.com/abstract=2329589 or http://dx.doi.org/10.2139/ssrn.2329589

Adewale Adegoke Alawiye-Adams

Afe Babalola University Ado-Ekiti ( email )

AFE-Babalola Way, Ijan Road
Ado-Ekiti, Ekiti State, South-West Nigeria 234
Nigeria
2348033900620 (Phone)
2348023462818 (Fax)

Babatunde Afolabi (Contact Author)

Department of Finance, Federal University Oye Ekiti ( email )

Oye Ekiti
Nigeria
+234 8035 029 400 (Phone)

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