THE IMPACT OF BANK LENDING ON SMALL-SCALE INDUSTRIES

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THE IMPACT OF BANK LENDING ON SMALL-SCALE INDUSTRIES

 

ABSTRACT

The title of this project is The Impact of Bank Lending on Small-Scale industries, (A case study of some selected small-scale industries in Aba Metropoly). In the course of this study, four research questions were stated, while three research questions were formulated using percentage and statistical chi-square technique for the analysis respectively. A total of 127 copies of questionnaire were administered to respondent, while 120 copies were correctly completed and returned. The findings are: it was found that their exist a divergence of opinion regarding.  The reason for default and most appropriate way of improving bank credit to small-scale industries. In setting up policies for banks, for banks concerning small-scale industries, the main purpose of bank operation should not be over looked. In terms of the need for bank credit for the growth of small-scale industries both banks and small-scale entrepreneurs should  agreed that  there  is need for extra finance for small scale entrepreneurs feel that lending requirements for this  are not economically feasible and so tend lo to look for other sources  of funds  which is usually insufficient. Based on the above findings, the following recommendations are made: Banks should promote advisory services and counseling to small-scale industries. The option of refinancing of loans should be used regularly. The need for regular payment of interest and loans should be stressed by banks the need for government intervention is very necessary.

CHAPTER ONE

INTRODUCTION

1.1        BACKGROUND OF THE STUDY

Banks as business concern must make profits in order to study in business. They usually have a range of multi-product services, which they render to the public, which are of crucial concern to the public, industries, depositors and regulatory authorities.

The main operation of banks is the lending of fund to other sectors of the economy through funds deposited by depositors. According to A. N Nwankwo (1987:164) he stated that:

Lending is considered effective of it successfully resources the bankers obligation of maximum profitability to share holders and maximum liquidity to the depositors. This is because highly profitable lending, which also ensures liquidity for depositors may always be effective.

Lending for commerce proposed may be considered effective in the profitability  and liquidity sense but may be ineffective in terms of maximum contribution to economic development. Similarly, lending to small-scale industries may be considered ineffective in the development sense. This  effective lending in a development economy like Nigeria may be defined as that equation of  lending which maximums  the objective of liquidity and profitability and the economy’s objectives of development. In Nigeria, the need for small-scale industries when was not fully realized until the early eighties when government started laying emphasis on direct credit to small-scale industries. This was one of the main objectives of the economic reconstruction programme under the structural Adjustment Programme (SAP), which was meant to boast the level of economic activities in the economy. Under the monetary policy, the banks are to allocate 20% of their loan-able funds to small-scale industries. The banks that do not comply are to be penalized by the Central Bank Of Nigeria (CBN). However, the banks have undergone a lot of problem in gravity such loans.

 

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THE IMPACT OF BANK LENDING ON SMALL-SCALE INDUSTRIES

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