AN ANALYSIS OF CREDIT MANAGEMENT IN THE NIGERIAN BANKING INDUSTRY: A STUDY OF FIRST BANK OF NIGERIA PLC, ILORIN

Abstract

Credit extension is an essential function of banks, and bank management strives to satisfy the legitimate credit needs of the customers. This study aimed at analyzing the credit management in the banking industry in Nigeria. The Nigeria banking industry witnessed some failures prior to the consolidation era due to imprudent lending that finally led to bad debt. The issue of non-performance of an asset and declaration of the fictitious project has become the order of the day in our banking system due to poor credit management leading to bank distress in the industry. A sample size of 110 was drawn from the target population of 326. Data were collected through questionnaire, while Taro Yamane’s formula was used to determine the sample size. Three hypotheses were tested using chi-square. The results showed that inadequate feasibility study affects loan repayment; also diversion of bank loan to unprofitable ventures affects loan repayment. The study therefore, concluded that issue of non-performance of assets and declaration of fictitious projects has become the order of the day in our banking system. The recommendations were that banks should establish a sound and competent credit management unit and recruit well-motivated staff. They should ensure that the chief executive approval in principle to credit management policies and banks should have a monitoring and control unit or department to carry out a sort of postmodern exercise by way of controlling and monitoring credit facilities.