AN APPRAISAL OF BUSINESS FUNDING PATTERN BY NIGERIA FINANCIAL INSTITUTIONS

AN APPRAISAL OF BUSINESS FUNDING PATTERN BY NIGERIA FINANCIAL INSTITUTIONS

(A CASE STUDY OF FIRST BANK PLC. OKENE BRANCH)

ABSTRACT

The centre focus of this research is to find out about business funding patterns by Nigeria financial institutions. The research work also carried out in order to know the benefits to be derived from this research activities. The project contains five chapters with different features, therefore, chapter one deals with the introduction, background of the study, statement of the problems, statement of hypothesis, objectives of the study, significance of the study, scope of the study and limitations of the study. Chapter two, focus attention on the literature review, historical background of the case study, concepts of finance, classification of financial institutions, the various funds patterns by financial institutions and roles of commercial banks in economic development in Nigeria and so on. Chapter three gives a comprehensive explanation on research methodology, research design, sources of data collection, population, sample and the preparation of research instrument. Chapter four deals with the presentation and analysis of data, research findings and testing of hypothesis. Chapter five deals with summary, recommendations and conclusions.

CHAPTER ONE

INTRODUCTION

1.1  BACKGROUND OF THE STUDY

Finance is an indispensable element for the continuity and maintenance of any meaningful business enterprises. For instance, any business organization whether new, old, large, medium, small needs various kind of assets to commence its operation and also for the long run survival of every business organization finance entails the original amount with which a person entered a business. The classes of assets that a business organization would required include cash assets which are needed for working capital, inventories, building and land to purchase or rent, raw materials but to mention but few.

Also, financial institutions provide the necessary finance needed not only for economic development but also for industrial development. Therefore, the existence of these banks serve as a common practice that bank are usually called upon to assist towards economic development which in turn provide available services by financing through medium and short term lending and advisory functions.

1.2  STATEMENT OF THE PROBLEM

Financial institutions in Nigeria are set up to render some services among which is funding of business, granting of credit facility to their customer, however, there have been some problem associated with this services that they render to customers, problem of banking in Nigeria is as a result of the absence of adequate collateral security by customers, of borrowers collateral security is something that the banks is willing to hold against the loan it gives the customers.

Also financial institutions is also affected by mass illiteracy of the people, especially in the rural areas of the economy, people proffers to hoards or keep new money at home instead of saving them. Loan defaulter is rampant because they have no much knowledge about it, the rate of interest is to high for them to be able to repay.

1.3  OBJECTIVES OF THE STUDY

There is nothing without an objective, the objective of undertaking this research work is to provide answers to the questions that will bring confidence in the mind of the management in any financial institutions.

       The objectives are;

1.     To find out whether loans are used for the purpose for which the beneficiaries collected them

2.     To find out the standard followed before loans are given out

3.     To find out if customers default in the repayment of the loans and reasons for such defaults.

1.4  SIGNIFICANCE OF THE STUDY

The findings in this study would be of significance in the following ways:

1.     It will assist the reader and decision maker within banking sector to know and identify the problems militating the operational activities of financial institutions

2.     The economic constitutions of the banking sector can be easily be appreciated

3.     It also offered management to give loan to customers that meet the requirement of loan.

1.5  RESEARCH QUESTIONS

In every research work carried out, there must be research questions which proof the researcher to carryout the research work effectively. Below are the research questions for this study;

1.     What is the main source of credit facilities available to financial institutions?

2.     At what rate did First Bank grant credit?

3.     What types of loan offered to customers?

4.     Does financial institutions experience inadequate funds?

5.     What is the amount of income of financial institutions?

1.6 STATEMENT OF HYPOTHESIS

Statement of hypothesis are drawn from statement of the problem which the researcher want to test the hypothesis and identified areas of problems.

Ho:  The rate of interest charged on loans granted by the first bank are too high

Hi:   The rate of interest charged on loans granted by the first bank are not too high.

1.7  SCOPE OF THE STUDY

The scope of this research work is limited to the use of questionnaire and observation made in the field. It is noted however that all banks in Kogi State cannot be studied. Therefore, effort is geared towards examining First Bank Plc in Kogi State.

1.8  LIMITATIONS OF THE STUDY

During the course of carrying out this research work, the research is confronted with many problems among which are;

1.     Financial constraints: It stand as a big constraints during the course of exercise which almost threatened the success of this work.

2.     Attitude of the respondents: Lack of cooperation of some respondents who were to supervise or give relevant information in most case, they decided thereby making the whole process a complex exercise.

3.     Time constraints: Lack of time have also made all the activities to become default to be embarked upon by the researcher.

1.9  DEFINITION OF TERMS

During the course of this study, the researcher have come across some terms/words which the research want to give meaning to these words and terms.

1.     Bank: A bank is an institution set up purposely for the safe keeping of money; valuable good and document like wills and others.

2.     Bank teller: This is a document used to paying into one’s account in bank

3.     Bank draft: This is an instrument rather to as cheques but which is drawn by a customer on his banker

4.     Loans: This is a bulk of money a bank give to its customers or others that meet up with the requirement.

5.     Order cheques: It is a cheque made payable to a person named on it or his order