THE EFFECT OF PRUDENTIAL GUIDELINES ON THE ASSET QUALITY OF COMMERCIAL BANKS IN NIGERIA (A CASE STUDY OF LISTED BANKS IN THE NIGERIA STOCK EXCHANGE)


THE EFFECT OF PRUDENTIAL GUIDELINES ON THE ASSET QUALITY OF COMMERCIAL BANKS IN NIGERIA (A CASE STUDY OF LISTED BANKS IN THE NIGERIA STOCK EXCHANGE)  

CHAPTER ONE

INTRODUCTION 

1.1 BACKGROUND OF THE STUDY

The need for the adequacy and strength of bank asset is essential for maintaining bank liquidity and investment in profitable ventures which will result in profit and growth for the bank. Bank assets are the outstanding loans of customers, the banks own investments and the banks properties. Such as fixtures and equipment. When the customer defaults in the payment of loans, the collateral of the investment that was financed is sold for the recovery of the loan while the bank also takes over the investment that was financed. This type of asset is on the books of the bank. The banks liabilities are the investment and savings deposits, and Customer checking account. The intangible and tangible properties which are controlled and owned to produce economic value is referred to as asset. The Assets can be converted into cash and also include physical cash. The inspection of the Asset to determine the level and size of credit risk associate with its operation is referred to as asset quality.

It fundamentally focuses on the quality of the revenue yielding capacity of the loan which provides earnings for the bank. Consequently, Asset quality and loan quality basically means the same thing. According to (Basle, 1997) seven of the fundamental principle of banking supervision lies on asset quality or credit management. The prudential guidelines stipulate the guidelines for asset classification and disclosure, provision for interest accruals and off balance sheet engagement. The essence is to identify problems early and proffer corrective measures before it gets out of hand Ajie, H.A (1997). The study seeks to determine the effect of prudential guidelines on the asset quality of commercial banks in Nigeria. A case study of listed banks in the Nigeria stock exchange.

1.2 STATEMENT OF THE PROBLEM

The high level of risk involved in financial transactions possess great danger to the loss of cash, investment and profit if no check is provided interms of regulations and monitoring measures. The prudential guidelines stipulate the guidelines for asset classification and disclosure, provision for interest accruals and off balance sheet engagement. The essence is to identify problems early and proffer corrective measures before it gets out of hand. The apparent mismanagement of funds in the banking sector which led to the liquidation of many banks constituted a challenge to customer confidence as to the ability of banks to keep under safe custody the funds of customers. This as a result led to the formulation of the prudential guidelines. The problem confronting the study is to investigate the effect of prudential guidelines on the asset quality of commercial banks in Nigeria. A case study of listed banks in the Nigeria stock exchange.

1.3 OBJECTIVES OF THE STUDY

The Main Objective of the study is to investigate the effect of prudential guidelines on the asset quality of commercial banks in Nigeria. A case study of listed banks in the Nigeria stock exchange; The specific objectives include:

i. To determine the nature of prudential guidelines.

ii. To determine the level of asset quality of commercial banks.

iii. To determine the effect of prudential guidelines on the asset quality of commercial banks in Nigeria. A case study of listed banks in the Nigeria stock exchange.

1.4 RESEARCH QUESTIONS

i. What is the nature of prudential guidelines?

ii. What is the level of asset quality of commercial banks?

iii. What is the effect of prudential guidelines on the asset quality of commercial banks in Nigeria?

1.5 STATEMENT OF THE HYPOTHESES

The statement of the hypotheses for the study is stated in Null as follows:

Ho1: The level of asset quality of firstBank is low.

Ho2: The level of asset quality of UBA is low.

Ho3:  The effect of prudential guidelines on the asset quality of First Bank is low.

1.6 SIGNIFICANCE OF THE STUDY

The study seeks to engender the adherence to prudential guidelines on the asset quality of commercial Banks. 

 1.7 SCOPE OF THE STUDY

The study focuses on the appraisal of the effect of prudential guidelines on the asset quality of commercial banks in Nigeria. A case study of listed banks in the Nigeria stock exchange.

1.8 LIMITATION OF THE STUDY

The study was confronted with logistics and geographical factors.

1.9 DEFINITION OF TERMS 

BANK DEFINED

A financial institution which was is established for the purpose of accepting deposits and other precious commodities from the public for safe keeping.

PORTFOLIO DEFIINED

This is a collection of investible funds.

PRUDENTIAL GUIDELINES:

The prudential guidelines stipulate the guidelines for asset classification and disclosure, provision for interest accruals and off balance sheet engagement. The essence is to identify problems early and proffer corrective measures before it gets out of hand.

BAD DEBTS:

There are debts which is not recoverable within the time frame set for their normal recovery period.

DOUBTFUL DEBT:

There are doubtful in case of recovery, hence they are termed doubtful debt.

EFFICIENT PORTFOLIO:

A group of asset that yield a maximum return for a given level of risk.

RISKS:

An index of the variability of realized from expected returns.

REFERENCES

Adekanhe, F. (1983); A Practical Guide to Bank Borrowing, U.K: Grahan Burn, Bedfordshire, U.K.

Adeniyi, O.A (1988); Employment Credit Scoring as an Aid to personal lending Decision in Nigeria Commercial Banks: The University Banker,Vol.11 

Ajie, H.A (1997); Credit Administration and Control in a Deregulated Economy, Port Harcourt: Osia International Press Ltd.

.


TYPE IN YOUR TOPIC AND CLICK SEARCH.






RESEARCHWAP.COM

Researchwap.com is an online repository for free project topics and research materials, articles and custom writing of research works. We’re an online resource centre that provides a vast database for students to access numerous research project topics and materials. Researchwap.com guides and assist Postgraduate, Undergraduate and Final Year Students with well researched and quality project topics, topic ideas, research guides and project materials. We’re reliable and trustworthy, and we really understand what is called “time factor”, that is why we’ve simplified the process so that students can get their research projects ready on time. Our platform provides more educational services, such as hiring a writer, research analysis, and software for computer science research and we also seriously adhere to a timely delivery.

TESTIMONIES FROM OUR CLIENTS


Please feel free to carefully review some written and captured responses from our satisfied clients.

  • "Exceptionally outstanding. Highly recommend for all who wish to have effective and excellent project defence. Easily Accessable, Affordable, Effective and effective."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "I saw this website on facebook page and I did not even bother since I was in a hurry to complete my project. But I am totally amazed that when I visited the website and saw the topic I was looking for and I decided to give a try and now I have received it within an hour after ordering the material. Am grateful guys!"

    Hilary Yusuf, United States International University Africa, Nairobi, Kenya.
  • "Researchwap.com is a website I recommend to all student and researchers within and outside the country. The web owners are doing great job and I appreciate them for that. Once again, thank you very much "researchwap.com" and God bless you and your business! ."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "I love what you guys are doing, your material guided me well through my research. Thank you for helping me achieve academic success."

    Sampson, University of Nigeria, Nsukka.
  • "researchwap.com is God-sent! I got good grades in my seminar and project with the help of your service, thank you soooooo much."

    Cynthia, Akwa Ibom State University .
  • "Great User Experience, Nice flows and Superb functionalities.The app is indeed a great tech innovation for greasing the wheels of final year, research and other pedagogical related project works. A trial would definitely convince you."

    Lamilare Valentine, Kwame Nkrumah University, Kumasi, Ghana.
  • "Sorry, it was in my spam folder all along, I should have looked it up properly first. Please keep up the good work, your team is quite commited. Am grateful...I will certainly refer my friends too."

    Elizabeth, Obafemi Awolowo University
  • "Am happy the defense went well, thanks to your articles. I may not be able to express how grateful I am for all your assistance, but on my honour, I owe you guys a good number of referrals. Thank you once again."

    Ali Olanrewaju, Lagos State University.
  • "My Dear Researchwap, initially I never believed one can actually do honest business transactions with Nigerians online until i stumbled into your website. You have broken a new legacy of record as far as am concerned. Keep up the good work!"

    Willie Ekereobong, University of Port Harcourt.
  • "WOW, SO IT'S TRUE??!! I can't believe I got this quality work for just 3k...I thought it was scam ooo. I wouldn't mind if it goes for over 5k, its worth it. Thank you!"

    Theressa, Igbinedion University.
  • "I did not see my project topic on your website so I decided to call your customer care number, the attention I got was epic! I got help from the beginning to the end of my project in just 3 days, they even taught me how to defend my project and I got a 'B' at the end. Thank you so much researchwap.com, infact, I owe my graduating well today to you guys...."

    Joseph, Abia state Polytechnic.
  • "My friend told me about ResearchWap website, I doubted her until I saw her receive her full project in less than 15 miniutes, I tried mine too and got it same, right now, am telling everyone in my school about researchwap.com, no one has to suffer any more writing their project. Thank you for making life easy for me and my fellow students... Keep up the good work"

    Christiana, Landmark University .
  • "I wish I knew you guys when I wrote my first degree project, it took so much time and effort then. Now, with just a click of a button, I got my complete project in less than 15 minutes. You guys are too amazing!."

    Musa, Federal University of Technology Minna
  • "I was scared at first when I saw your website but I decided to risk my last 3k and surprisingly I got my complete project in my email box instantly. This is so nice!!!."

    Ali Obafemi, Ibrahim Badamasi Babangida University, Niger State.
  • To contribute to our success story, send us a feedback or please kindly call 2348037664978.
    Then your comment and contact will be published here also with your consent.

    Thank you for choosing researchwap.com.