ROLE OF COMMERCIAL BANKS IN FINANCING SMALL SCALE INDUSTRIES (A CASE STUDY OF UNITY BANK PLC, AUCHI)

ABSTRACT

This research examines the role of commercial Banks to finance small-scale industries using Unity Bank Plc as a case study, questionnaire were administered to company staff collection of data and analysis of data were used. Also testing of hypothesis chi-square formula was used because it enables the researcher to know the relationship existing between the variance tested. The researcher recommends among others that proper financing of small-scale industries could boost management effective and efficiency with accurate and timely decision making. 

TABLE OF CONTENT

Title page ---------------------------------------------------------------------i

Certification------------------------------------------------------------------ii

Dedication--------------------------------------------------------------------iii

Acknowledgment------------------------------------------------------------iv

Table of content------------------------------------------------------------v-vi

Abstract ----------------------------------------------------------------------vi

CHAPTER ONE:  INTRODUCTION

1.1            Background to the Study-------------------------------------------1

1.2             Statement of the Study---------------------------------------------2

1.3            Research Question  --------------------------------------------------3

1.4            Research Hypothesis -------------------------------------------------- 3

1.5            Purpose of the Study ---------------------------------------------------4

1.6            Scope of the Study -----------------------------------------------------4

1.7            Significant of the Study------------------------------------------------5

1.8            Limitation of the Study------------------------------------------------5

1.9            Operational Definition of Terms ------------------------------------6

CHAPTER TWO: LITERATURE REVIEW

2.1      Introduction ------------------------------------------------------------9

2.2      Origin of Banking -----------------------------------------------------10

2.3     Types of Banks----------------------------------------------------------11

2.4     Definition of Commercial Banking --------------------------------12

2.5     Functions of Commercial Banks------------------------------------13

2.6     Importance of Commercial Banks----------------------------------16

2.7     Internal Problems Faced by Commercial Banks-------------18

2.8     Solution of the Problem--------------------------------------------20  

CHAPTER THREE: INTRODUCTION

3.1     Research Design -----------------------------------------------------27

3.2     Population of the Study--------------------------------------------27 

3.3     Sample/Sampling Techniques-------------------------------------27

3.4     Data Collection/Analysis-------------------------------------------28

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1     Presentation of Data--------------------------------------------------30 

4.2     Data Analysis----------------------------------------------------------36

4.3     Interpretation----------------------------------------------------------31

4.4     Discussion-------------------------------------------------------------41                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

CHAPTER FIVE: SUMMARY

5.1     Introduction-----------------------------------------------------------43 

5.2     Summary of Finding-------------------------------------------------43

5.3      Conclusion------------------------------------------------------------43

5.4      Recommendation-----------------------------------------------------44

          Reference

Appendix I

Appendix II

CHAPTER ONE: INTRODUCTION

1.1            BACKGROUND TO THE STUDY

For many developing countries in Africa, Nigeria inclusive, rapid development means rapid industrialization. Nigeria as a developing country needs a maximum increase in its standard of living for this to be accomplished, there has to be co-ordination between government financial policies and implementation on one hand and practice of our financial institution.

Various countries have adopted different approaches when it’s comes to process of industrialization. For a programmatic rapid industrialization, the government of Nigeria has adopted several policies that will enable forceful and productive small-scale industries.

The guest for small-scale industry came about as a result of numerous problems such as lack of capital, balance of payment problems etc. The Nigeria government is making a generous effort to encourage investment in small-scale sector of the economy.

In respect of the above, the research work will critically examine the development of small-scale industries growth using Unity Bank Plc as a case study.

1.2            STATEMENT OF THE PROBLEM

In Nigeria a lot of handicap is evident when establishing small-scale industry due to some important parameters, which are considered necessary if small-scale industry is to grow and function efficiently.

One of the problems is shortage of capital for the development of small-scale industries. The much need financial support from the financial institution in Nigeria is a veritable instrument for sustainable small-scale industrial development. This could be achieved through a consistent granting of soft loans will less stringent collateral security of something near interest free funding of viable project. However, higher demand for collateral security and higher loan interest has constituted a major hindrance to the development of small-scale industry in Nigeria. 

1.3            RESEARCH QUESTIONS

i.                   Are Commercial Bank faced with problem of poor organization.

ii.                 Does inadequate capital deter Commercial Banks from growth?

1.4            RESEARCH HYPOTHESIS

For the purpose of an in depth study, the research adopted the following hypothesis stated in a null and alternative format.

Hypothesis (I)

Ho:  Commercial Banks are not faced with the problem of poor organization.

Hi:  Commercial Banks are faced with the problem of poor organization.

Hypothesis (II)

Ho:   Inadequate capital for Commercial Bank to operate will not make it difficult for them to grow.

Hi:    Inadequate capital for Commercial Bank to operate will make it difficult for them to grow.

1.5            PURPOSE OF THE STUDY

The provision of sufficient and less expensive finance to business needs to be addressed. Here, this study is aimed at achieving the following objectives.  

Ø To list the various source of finance available to small-scale industries.

Ø To examine the role of Commercial Banks in reaching the need of small-scale industries.

Ø To know other better ways of obtaining financial assistance by small-scale business through borrowing from Commercial Banks and other financial house.

1.6            SCOPE OF THE STUDY

The study will entail Commercial Banks operations. How Commercial Banks can be improved upon and what they can do to reduce their over-growing bad and doubtful debts. This study will concentrate on Unity Bank Plc, Auchi as a case study. We shall also review small-scale business such as sole proprietorship and partnership.  

The contribution of Commercial Bank in financing small-scale industries. The limitation and recommendation to overcome these limitations.

1.7            SIGNIFICANCE OF THE STUDY

This study is significance in that it will help provide the right information to existing and intending investors in the small and medium scale sector of the economy. The study will help to expose the merits and demerits of utilizing the services of financial institution in Nigeria. It will also assist the entrepreneurs investing in small-scale business outlet. The study will also help the government to map out plans and programmatic strategies on how to assist small-scale business to grow.  

1.8            LIMITATION OF THE STUDY

The problem faced by the researcher is that of acceptance especially when dealing with certain group of people, one requires a lot of explanation and persuasion to get the co-operation of such respondent. Another problem faced is the non-challant attitude of bank official to release certain document and information.

          Inadequate finance is another obstacle faced by the researcher in the course of writing this study works.

1.9            OPERATIONAL DEFINITION OF TERMS

(i)                Commercial Banks:  These are Banks, which understand all forms of banking business. They lend money to the general public and accept deposits as well.

(ii)             Bank:  A Bank is a business firm where money is received and paid, loan negotiated and generate financial business transaction.   

(iii)           Loan:  This is a bulk of money given by bank to its customers or others that meets the bank lending policies. It is a form of credit facilities to customers of the bank.

(iv)           Bank Overdraft:  This is a Banking facility, which allows a customer overdraw his account over and above what it contained. That is, a customer is allowed to draw a cheque for a sum of money above his normal account balance and it is only applicable to current account holders.

(v)             Sale Proprietorship: This is a kind of business organization which is owned and managed by a sole individual.

(vi)           Investment:  These are individuals who borrow money from Commercial Banks to set-up a business with a view of making profits.

(vii)        Small-scale Industries: These forms of business organization would limit to sole proprietorship and the partnership where capital is provided by the organizer of the business.

(viii)      Special Directive: This is an instruction by the Central Bank of Nigeria (CBN) to the Commercial Bank regarding the size and the direction of bank lending due to the economic situation.

(ix)           Creditors:  This is a form of current liability whereby customers of small-scale industry are indebted financially to the Commercial Banks.

(x)             Cheque:  This is a written document instructing a bank to pay a given sum of money to a named person or bearer at a specific period of time.

(xi)           Commercial Papers:  This is an unsecured money instrument of promissory note issued or sold in the money market.

(xii)        Bank Acceptances:  This is used for companies engage in foreign trade.

(xiii)      Trade Credit:  This is the facility which is given by the supplier in the normal course of business to a buyer to postpone payment for a specified period of time.

(xiv)      Discounted Bill:  This is when a holder of a bill decides to sell the bill at a price lower than the actual value, usually to a bank or a discount house.  

Buyers has the right to create dispute within seven (7) days of purchase for 100% refund request when you experience issue with the file received. 

Dispute can only be created when you receive a corrupt file, a wrong file or irregularities in the table of contents and content of the file you received. 

ProjectShelve.com shall either provide the appropriate file within 48hrs or send refund excluding your bank transaction charges. Term and Conditions are applied.

Buyers are expected to confirm that the material you are paying for is available on our website ProjectShelve.com and you have selected the right material, you have also gone through the preliminary pages and it interests you before payment. DO NOT MAKE BANK PAYMENT IF YOUR TOPIC IS NOT ON THE WEBSITE.

In case of payment for a material not available on ProjectShelve.com, the management of ProjectShelve.com has the right to keep your money until you send a topic that is available on our website within 48 hours.

You cannot change topic after receiving material of the topic you ordered and paid for.