This research work is centralized on the problem and prospects of credit creation by Nigeria commercial banks with special reference to Wema bank plc Ilorin it attempts to implore the problem and respects of credit creation by Nigeria commercial bank to achieve maximum creation of credits, the research will be divided into five chapters for easy understanding of the entire work chapter one is termed general introduction which comprises background to the study on how credit creation is established. Chapter two is termed literature review in this chapter we intend to survey the various opinion and view of scholars on the different aspect of the relationship between the management of the commercial banks in Nigeria and their performance. Chapter three is discuss research methodology in this chapter we intend to take a brief of the historical background of the problem and prospects of credit creation and examine the business objectives and at the same time appraises its creation and decision making chapter four is date analysis of data collected for this study both orally and through questionnaire and observation, chapter five is termed summary of finding in this chapter observation were made on opinions of respondents and also suggest recommendations and conclusion were draw in this chapter.


Title page

Certification page



Table of Content


1 Statement of Research

2 Background of the Study

3 Objective of the Study

4 Significance of the Study

5 Research methodology

6 Definition of terms

7 Plan of the Study


2.1 Historical Background of Wema Bank of Plc of Nigeria

2.2 Function of the various Department

2.3 Central Bank and Credit Creation of commercial bank

2.4 Procedure of creating credit facility

2.5 Credit management in commercial bank

2.6 Steps in Credit Management

2.7 Principles and practices building lending at Wema

Bank Plc

2.8 Credit administration and securities acceptance to Wema Bank Plc


3.1 Method of Data Collection

3.2 Sampling Techniques

3.3 Sampling Techniques

3.4 Limitation of the Methodology


4.1 Introduction

4.2 Data Presentation

4.3 Data Analysis


5.1 Observation

5.2 Summary

5.3 Conclusion

5.4 Recommendation 




A commercial bank be defined as a dealer in money and credit, holding it and receiving from the public, deposits respectable on demand by cheque or their withdrawal instrument.

The idea of a banking system was introduced Nigeria in 1892 with the establishment of Africa banking co- operation. Another one was introduced in 1894 which was named British West African Bank.

The British West Africa Bank was later changed to chase merchant bank to become standard bank of Nigeria. In 1899, Bank of 1917, it was taken to Nigeria and came into existence but later, it was taken over by the bank of British West Africa in 1912. In 1917 it was the establishment of Barclays Bank.

The first indigenous bank and that came into existence in 1929, with the name industrial and commercial Bank. Also, 1934 witnessed the establishment of Nigeria merchant Bank.

Although, it was later closed down due to lack of funds, Bad management coupled with large scale corruption.

Furthermore, the national bank of Nigeria was established on a sound footing but, due to greater post- war activities, the bank was close down. In addition, between 1945 and 1947, four indigenous banks were Africa continental bank (ACB) and Agbonmogbe Bank which was now called Wema Bank PLC.

It was a booming era between 1951 and 1952 because eight banks were established. But in 1951 seven banks closed down only Mercantile Bank survive. It was not that the way surviving bank out of the seven that close down in 1954 had is license withdraw by the state government funds.

All banks in Nigeria were either owned by the state government or the federal government. But this trend did not continue to the policy of revitalization and commercialization embarked upon during the Banbangida administration in 1989.

Commercial bank play very important role in the allocation of fund to individuals and business organization in the society.

One of the principal function of commercial bank is the creation of credit facilities which is the process of distributing and disbursing of fund to potential user at favorable terms and conditions and making sure that fund are effectively utilize to ensure the anticipation benefit to borrowers and lending bank.

Credit facilities are being enjoyed by the account holder i.e individual and business organization respectively. It can be listed that traditional function of bank is financial intermediate i.e their real role is concerned with the monetary aspect of the economy which involve the mobilization of fund from savers scattered in the society and their transfer as credit to investors.

There were many average business entrepreneurs who could not or were unable to raise enough funds from their trade for expansion purpose or from other sources like through friends and others.

Their last result therefore is to source for fund.


The focus of this study by the researcher is to identify the problems and prospects of credit creation by Nigeria Commercial Banks. In course of the study, effort has been made to find solution to the following research problems.

⦁ What is the historic cal background of Credit creation by Nigeria Commercial Banks?

⦁ What are the reasons for credit creation in Nigeria?

⦁ What are the impacts of commercial banks on credit creation?

⦁ What is the effect of credit creation on Nigeria economy?

⦁ What is the impact of prospect on Nigeria Commercial Banks?

⦁ What are the steps involved in the successful commercial Bank?

⦁ What are the likely problems facing the development of credit creation by Nigeria commercial banks?


The objective of this research is to know the purpose of-creating credit by commercial banks which include the following.

i.   To Increasing the purchasing power of the people. 

ii. To Increasing the volume of money in circulation. 

iii. To it enhance industrial expansion. 

iv. To it helps businessman in his day to day activities

v.    It helps in development of agricultural sector

vi.   It helps in facing both and home trade


On completion of this work, the outcome has to the existing literature of problem and prospect of credit creation by commercial bank and guide for future researchers on this topic.

It also spelt out the importance of commercial Bank in Nigeria.

The entrepreneur and businessmen will also more enlightening on the function of various department of Wema Bank on how to contact debtors on the repayment of the debts and also to lies with the legal department in case of bad debt.

While the Banks will also benefit from the research work with respect to the problem & prospect of credit creation and accepting of deposit by commercial Banks.


The research intent to carry out research work on the problem and prospects of credit creation by Nigerian Commercial banks with special banks with special emphasis on Wema Bank Plc.

The research is in research methodology which has been constraint to sufficient chosen as a

study was visited to collect the necessary materials and interview a cross- section of their customs.


i. Credit cash:- The bank advances loans to businessmen against certain specified securities, 

ii. Bank:- Is an institution which accept deposit from public and in turn advance loans by creating


 iii. Advance and loan:- Is the way of lending or giving out advance or loan to the customer of the bank for specific period with the pattern of repayment in specific time. There are three types of advance and loan.

  a. Medium, term loan

   b. Short term loan

   c. Long term loan

iv.   Over draft: - This is a situation when customer withdraws more than what is in his account e.g. customer has £f500 in him bank deposit and withdraw &1000. Overdraft can be arranged by the bank to the customer. If the customer require for it is up to maximum limit.

v.     Money Market: - These are market for short term investment. It has no physical market place it brings banks and dealer linked together by telex, telephone and computer.

vi.    Discount rate: - These are the rate used to calculate the present value of future cash flows, vii.       Deposit:- This is a situation whereby the banks accepts deposit of money from their customer for proper safe keeping in their custody. Banks accept three kind of deposit account from its customer.

i. Saving-account: - This is a situation whereby bank small interest for the depositions who are small they make use of cheque book.

ii. . Current account: - These are account operated by businessmen. The bank does not pay interest on such account but instead charges a normal sum service rendered to its customer,

iii. Fixed or time deposit account:- Saver who do not need money to stipulated period 6 month or two year or more are encourage to keep in fixed deposit account, the bank paid higher rate of interest on such deposits. 


The research work has been divided into five chapters for easy presentation of the fact and figures gathered. The first chapter extensively deals with introduction or background of the study, statement of the problem, Aims and objectives of the study, significance of the study, scope and limitation and definition of key terms.

Chapter two treated past and current literature review, Chapter Three will highlight research methodology Chapter four discusses Data Presentation of analysis data.

Chapter five finally throws light on the summary, conclusion and recommendations.



Commercial banks has been defined according to the various functions of performs.

OKIGBO (1978) defined commercial Banks ad financial institution that mobilize saving from the surplus unit and tends it to the deficit unit in economy.

YAHAYA (2001) defined commercial Banks as a monetary institution established by private or public organization for the purpose of maximization of profit and other objectives.

K.A ISHOLA (2001) defines commercial Banks are monetary institution owned by private businessmen for purpose of making profit for its shareholders. It trade solely in money, using money to create or make money.

ADEBAYO, R.O (1999) defines. Commercial Banks as an institution that offer a deposit transfer and loan services to compares and private individuals.

S.A OYETOYAN (2008) defines function of commercial Banks are money creating function and services Rendering functions. Money creating is done by creating deposits and savings and giving out loans and overdraft. "He said the problems of credit creation are. Restriction of lending by the monetary authority, leakage from the banking system, availability of collateral security willingness of banks to lend and customers to borrow.

In extending credit creation of customers, production is increased


The Wema bank plc formerly known as Agbomogbe bank limited was incorporated on the 2nd of may, 1945 as a private limited liability commercial bank company with an authorized shares capital of E15000 (fifteen thousand pounds) fully paid equivalent to N 1,920.000 jointly owned by Chief M.A. OKUPE and MR. A.A. Alade.

The bank was incorporated with the following objective

1. The prevision of efficient and modern banking service to Nigeria business men, trader and craftsmen at a researchable price.

2. The assurance that bank is operation in a purely commercial basis to ensure that enough funds for expansion and modernization are rapidly available when needed.

3. Identification of the bank which the economical and industrial aspiration of the country.

4. The creation of the better condition of service for the employee to ensure maximum job satisfaction consisted with the bank overall objective.

In order to enable the bank to maximize the effect of the factor listed above and substantially increase its scale of operation it authorities share capital was increase to E25, 000 (twenty five thousand pounds) equivalent to N3, 200,000.

The western Nigeria government rose up to the assistance of the banking through its agency the western Nigeria marketing board by making deposit of N100,000 equivalent to N12;8000 out of which N80,000 equivalent to majority share holder of the bank.

The bank continental its operation with is level of capitalization until 1968 when a new banking decree was promulgated by the federal military government

The raise minimum share capital of the indigenous commercial bank to N300, 000 resulting in a marked different the ownership and control structure of the bank.

To reflect the true ownership structure of the bank and restore the much needed public confidence necessary for continuous customer patronage the name Agbomogbe. Bank limited was change to Wema bank Ltd, on the 1st of June, 1970 a also the share capital of the bank was increase to N4 million.

The history of Wema Bank connect be completed without due recognition of past and present managing directors who in their various way contributed to the development of the bank.

It first general manager in 1970 was Alhaji Tajudeen Onigbanjo who was succeeded by late Mr. S. O. Adeleke in 1971 therefore Alhaji Akande from 1973-1981 he was succeeded by late MR. J.A. court a Britain in 1981 a. Chief S.I Adegbite in 1983. during the merge and acquisition that took place in the year 2005 Wema bank Plc merge with national bank plc, this made Alhaji Olapade Mohammed the chairman of the bank and Adebisi Omoyeni chief executives.



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