THE IMPACT OF ACCOUNTING INFORMATION ON LENDING DECISION OF COMMERCIAL BANKS IN
NIGERIA
NUMBERS PAGES: 40 RESEARCH TYPE:- PROJECT AMOUNT :- ₦2500
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ABSTRACT
Most banks operating in Nigeria today are finding an
increasing number of loans in their portfolios that have gone
sour. The reasons for this undesirable situation vary as a
result of bad loan decision at inception, deterioration later on
or simply the effects of the economy. However, literature in the
field of accounting has shown that accounting information is
helpful in decision making not only in all spheres of business
but also at all levels of management. This study, therefore
investigates the impact of accounting information on lending
decision in Nigerian commercial banks. To this end, two
hypotheses were developed and tested at 5% level of
significance using the nonparametric chi-square test. Then
data used in the tests of the hypotheses were derived mostly
through the administration of structured questionnaire to the
25 commercial banks that fall within the sample frame. These
data supplemented by personal interviews with the
respondents, were used to support the analysis to arrive major
findings. Interviews with lending officers were held with a
view to: Seeking practical insight into lending in commercial
banks which only such interviews could provide: Gather
information for refining lending principles and techniques in an
effort to make them more applicable in commercial banks.
Examine current practices as an aid in judging the relevance of
accounting information that were thought to be applicable in
banking lending. Following a detailed analysis of the
responses to the questionnaire, the major findings of this study
are summarized as follows: Accounting information is a
necessary ingredient in bank lending decision. Accounting
ratios enriches the decision making ability of lending officers,
by providing them with pertinent information. The lending
policy of Nigeria commercial banks revolve around the
minimization of load defaults and the maximization of profit.
Finally, other important areas for further research were
suggested.
Recommendation; the researcher was of the view that if they
are implemented by Nigerian commercial banks their lending
decisions will improve significantly.
TABLE OF CONTENTS
Title page = = = = = = = i
Certification = = = = = = = ii
Dedication = = = = = = = iii
Acknowledgement = = = = = = iv
Abstract = = = = = = = v
Table of Contents = = = = = = v
CHAPTER ONE: INTRODUCTION
1.1 Background of the study. 1
1.2 Statement of Problem 5
1.3 Research Question 6
1.4 Objectives of Study 7
1.5 Hypotheses of the Study 8
1.6 Scope of the Study 9
1.7 Limitation of the Study 9
1.8 Significance of the Study 10
1.9 Definition of Terms 11
References 13
CHAPTER TWO: A REVIEW OF RELATED LITERATURE
2.1 A brief survey of the banking industry 14
2.2 Extension of credit and the basic principles of lending. 17
2.2.1 The basic principles of Lending 19
2.2.2 Character 24
2.2.3 Capacity 25
2.2.4 Capital 25
2.2.5 Collateral 26
2.6 Condition 26
2.3 Management Information System 27
2.3.1 Characteristics of good information system 27
2.3.2 Types of management information system 28
2.4 Management Accounting information System 29
2.4.1 Setting up a management Accounting System 30
2.5 The relevance of decision making to bank lending 31
2.5.1 Steps in lending decision 32
2.5.2 Accounting information and bank lending 35
2.5.3 A simple model of information and Lending
behaviour 37
2.6 Accounting system as a management
Information system 40
2.6.1 Characteristics of Accounting Information 42
2.7 An overview of Accounting ratios 44
2.7.1 Importance of Ratio Analysis 45
2.7.2 Classification of ratios 46
2.7.3 Interpretation of ratios 53
2.7. Weakness of ratio analysis 53
2.8 Lending pattern/Loan analysis 54
2.81 Summary 55
References 58
CHAPTER THREE: RE3EARCH METHODOLOGY
3.1 Introduction 59
3.2 Research design 59
3.3 Population description 60
3.4 Questionnaire design 61
3.5 Data collection 62
3.6 Method of Analysis 63
3.7 Summary 64
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Presentation 66.
4.2 Data analysis 66.
4.3 Test of hypothesis 83
4.3.1 Hypothesis one 83
4.4 Result for Testing of Hypotheses 84
4.5 Summary 87
CHAPTER FIVE:
SUMMARY OF FINDINGS, RECOMMENDATION
AND CONCLUSION
5.1 Summary of Findings 88
5.2 Recommendations 92
5.3 Conclusions 94
5.4 Recommendation for Further Studies 98
