CHAPTER ONE 1.0                 INTRODUCTION 1.1                 BACKGROUND OF THE STUDY

Credit management in banking sector is an important issue in the economy of a country. It is important in the scene that success or failure in the management of credit determines the continued existence of any retail bank in the country.

It is also important to the economy because the success or failure of any retail banks, that provides retail banking services (which can accept or grant loan as low as W100 to its customers) to the general public will have direct effect on the deposit that is collected from their customers.

Bank is one of the many institutions that perform financial intermediary role in the Nigeria economy. The word "credit can be defined as belief, trust or faith. More elaborately, credit is a means by which people are enable to acquire commodities, such as goods and services, the sales of credit facilities is not the final, because it is expected to be repaid at a future time with interest. There are quite a number of thing which the bank should take into consideration in order to make control and management of credit easy.

Retail bank ability to provide large credit depend on depositor's money, because retail bank are financial intermediary between surplus (depositors) and deficit, sector (Borrowers) of the economy.

In order to protect the confidence that depositors have in banks, there is need for the proper management of credit facilities which are disbursed to borrowers to avoid default or delay in repayment of their facilities together with interest.

Where bank fail to perform its duty and subsequently became distressed or liquidated, it is not only the share holder's equity that will be lost, but customer's deposits will also be affected. This is the reason why the federal government, the Central Banks of Nigeria and the Nigerian Deposit Insurance Co-operation (NDIC) did not leave the management on banking activities particularly in the area of credit facilities to the operator in the banking industry alone but also monitor the activities through directive and policies from time to time.

Credit comes in different forms and terms according to customer's need and nature of business. A high light of this is taken from prudential guidelines for licenses bank, credit facilities which include loans advance, overdrafts, commercial papers, bankers' acceptance and guarantee.

According to Seyi N. Athem (1994), "the process of optimal credit management therefore, entails the creation and administration of facilities to wards a full and satisfactory repayment within the agreed time frame". Credit management has become a major issue facing lender of today.

The achievement of a hundred percentage repayment of credit facilities with interest within agreed time and condition is more or less an illusion in the banking industry recently. Optimal credit management is therefore one that on credit is risk, that is those granted customers, privates, corporate, and government be it local, state or federal.

Optimal credit performance also recognized that credit facilities have to manager with an acceptable balance in the mix-safety, liquidity and possibility requirement. Under such condition, repayment could still be achieved at a slightly longer period without loss of financial; through there may be an acceptance interest, discount or waivers.


We may have effect of credit management policy on bank performance. A variety of factors can cause the operation of banks to fail to achieve its objectives.

In conducting the research, questionnaires, such as these are asked, what are the resultants effect of credit management on bank performance and how has effect of credit management improve in the banking sector.

1.3                 OBJECTIVE OF THE STUDY

The task of this study is to examine credit management process carried out by the retail banks.

The following are the objectives of the study.

To critically examine credit management with a view of finding out loopholes which debtor usually exploit to default or delay in repayment of credit facilities granted to them. To highlight the main causes of poor credit management banking sector. To state the basic conditions/principles that win faster good credit management in financial institution. project topics   final year project topics and research materials 


           There are many area on which question could be raised in credit management. Among these areas are preparation and appraisal of feasibility report, monitoring and control of customer activities after the disbursement of the facilities and which sector of the economy is most convenient or risky to lend. When managing credit to make maximum profit without faulting the liquidity ratio imposed by the Central Bank of Nigeria.

Hypothesis could be described as a conjectural statement which could either be null or alternative that is:

Null hypothesis is represented by Ho; and alternative hypothesis is represented by Hi.

Ho:      Customers did not find it difficult to obtain credit from the bank Hi:       Customers find it difficult to obtain credit from the bank

Ho:    Bank manager does not lend money without collateral security.

Hi:       Bank manager lends money without collateral security.


In recent times, a range of commercial bank have been distressed and same liquidated. The major cause of this problem could be traced to poor credit control and management. To reverse mis trend, this research work is very relevant and should be strictly adhered to also. If any country is to develop economically, socially and in other aspects, there is need for efficient money and capital market. The study will concentrate and focus on the control and recovery of credit granted to bank customers while it maintains its liquidity position.


Time and resources have been the limitation of the research. This has caused us to limit our finding only to Sky Bank P.L.C, which is believed to the representative enough being a leading retail bank with several branches all over the country.

1.7            DEFINITION OF TERMS

1.     Bank: The bank is a commercial institution which performs various financial   activities   e.g.  Acceptance   and handling of deposit of its customers. 2.     Borrowers: A borrower is a person who collects money or asset from the lender (bank) and who enters into legal agreement to repay the principal and interest in future period. 3.     Banking industry: All banks in general, rendering banking service to the public. 4.     Distress: Distress is the inability of the bank to meet the financial demand of its customers. 5.     Industry: This is an enterprise where goods and services are rendered to the public in return for revenue. 6.     Lender: A lender is a person (bank) who gives financial obligation (money) by way of loan or overdraft to the borrower (customer) to enable him fulfils certain aims and objectives relating to    its business or domestic problems. 7.     Liquidity Ratio: Liquidity ratio is the percentage of cash that the bank must hold in liquid form in order to meet the future demands of its customers. 8.     Retail banks: Commercial Banks are otherwise known as the retail banks because they can grant or accept as one hundred naira (N100) to or from their customers.


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How To Write Chapter Three Of Your Research Project (Research Methodology)

  • Methodology In Research Paper

    Chapter three of the research project or the research methodology is another significant part of the research project writing. In developing the chapter three of the research project, you state the purpose of research, research method you wish to adopt, the instruments to be used, where you will collect your data, types of data collection, and how you collected it.

    This chapter explains the different methods to be used in the research project. Here you mention the procedures and strategies you will employ in the study such as research design, study design in research, research area (area of the study), the population of the study, etc. You also tell the reader your research design methods, why you chose a particular method, method of analysis, how you planned to analyze your data.

    Your methodology should be written in a simple language such that other researchers can follow the method and arrive at the same conclusion or findings.

    You can choose a survey design when you want to survey a particular location or behavior by administering instruments such as structured questionnaires, interviews, or experimental; if you intend manipulating some variables.

    The purpose of chapter three (research methodology) is to give an experienced investigator enough information to replicate the study. Some supervisors do not understand this and require students to write what is in effect, a textbook.

    A research design is used to structure the research and to show how all of the major parts of the research project, including the sample, measures, and methods of assignment, work together to address the central research questions in the study. The chapter three should begin with a paragraph reiterating the purpose of research. It is very important that before choosing design methods try and ask yourself the following questions: Will I generate enough information that will help me to solve the research problem by adopting this method?

    Method vs Methodology

    I think the most appropriate in methods versus methodology is to think in terms of their inter-connectedness and relationship between both. You should not beging thinking so much about research methods without thinking of developing a research methodology.

    Metodologia or methodology is the consideration of your research objectives and the most effective method and approach to meet those objectives. That is to say that methodology in research paper is the first step in planning a research project work.

    Design Methodology: Methodological Approach

    Example of methodology in research paper, you are attempting to identify the influence of personality on a road accident, you may wish to look at different personality types, you may also look at accident records from the FRSC, you may also wish to look at the personality of drivers that are accident victims, once you adopt this method, you are already doing a survey, and that becomes your metodologia or methodology.

    Your methodology should aim to provide you with the information to allow you to come to some conclusions about the personalities that are susceptible to a road accident or those personality types that are likely to have a road accident.

    The following subjects may or may not be in the order required by a particular institution of higher education, but all of the subjects constitute a defensible in metodologia or methodology chapter.

    Click here to complete this article - How To Write Chapter Three Of Your Research Project (Research Methodology)


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