1.1 BACKGROUND OF THE STUDY
Banking operation in Nigerian started sometimes in 1891 when it become
apparent that banking facilities was urgently needed especially. IN
1892, THE African Banking Corporation – the first commercial bank in
Nigeria was established to cater for the distribution of Bank of England
notes on behalf of the British treasury. The bank later wound up its
operation in 1892, and in 1893, Elder Dempster and Co. were approached
and through the initiative of Sir Alfred Jones, another Bank was opened
the Bank of British West Africa (B.B.W.A) in 1893, the bank was thus
registered in England as a Limited Liability Company on 31st
March 1894. its Head Office was in Liverpool (with a staff of only two).
The Lagos branch office was also opened in the same year.
The credit creation in the
banking industry in Nigeria handled the import and export of mint coins,
until 1959 when the Central Bank of Nigeria was established.
Commercial bank can be
defined as dealer in money and credit holding itself out to receive from
the public, deposits repayable on demand by cheque. The National Bank
of Nigeria was established on a sound footing due to greater post
activities, the bank had to close down, between 1915 and 1947, four
indigenous banks was setup only to show and survived, the two banks that
survival were African Continental Bank (ACB) and Agbon-magbe Bank
which is now called Wema Bank of Nigeria Plc.
Commercial banks play an
important role in the allocation of funds to individual and business
organization in the society. One of the principal functions of Wema Bank
in the creation of credit facilities which is the process of
distributing of fund to potential utilized to ensure that anticipated to
fits to the borrower and lending bank.
Credit facilities are being
enjoyed by the account holders individuals and co-operate bodies,
monetary aspect of the economy which involves the mobilization of founds
from their trade for expansion purpose from other sources through
friends and others, their last result is to source for funds from the
government bank which play with attention to the flight of the leader.
1.2 STATEMENT OF THE PROBLEM
In the course of study, a close critical
examination of commercial banks in Nigeria reveal that commercial banks
help their customers in the provision of banking services in Banking
Industry it is also noted that all banks are profit oriented and thereby
fail to meet up with their customers in the provision of banking
services in Banking Industry it is also noted that all banks are profit
oriented and thereby fail to meet up with their customer’s demand. There
is also unhealthy compilation in the industry, which has made it
difficult for banks to perform necessary function to their respective
The problems of credit creation in the
Banking Industry makes the researcher to note that the objective of
banks to meet up with their customers services go in a long way to
achieve the stated objective of banking system. Liquidity which is
highly important to meet with customers demand as a result of this
problem in this sense, the study is set up to find out what were
responsible for that failure and offer suggestion on how bringing
desirable improvement in Banking Industry.
1.3 RESEARCH QUESTION AND / HYPOTHESIS
The instrument used are
factual question and direct personal interview, by using factual
questions the respondents were allowed or given maximum freedom to
discuss at length for their understanding and opinions about the project
topic, however in addition to factual question, direct interview method
was also adopted to add other necessary information for the
effectiveness of the study.
As the topic deals with in
these project, is making oriented. Therefore people of total number of
twenty questionnaire was sent to select number of people who we
believed, and knowledgeable of the study within the marketing circle of
Also, in this project the
use of a question called STRUCTURED QUESTIONNAIRE was to explain the
purpose of the research to the respondents and to elicit their
co-operation in answering the question there in.
The question set in the questionnaire are of two type
1. DICHOLOMON QUESTION: These types of question requires the respondents
to pick what he/she considers corrects by ticking the box; Yes ( ) or No ( ).
2. SUGGESTED QUESTION: Here the
respondent are expected to write what they feel is/are correct response
the question(s) asked. Both systems were used as part A and B.
A question analysis and evaluation of
the question will be facilitated which part B allow respondents to give a
direct response to secure a more general response for an opened
1.4 PURPOSE OF THE STUDY
This project work aims
verifying the contribution with effectiveness of the problems and
prospect of credit creation in banking industry in Nigeria.
1.5 SCOPE OF THE STUDY
This study would concern itself with the procedure of creating credit facilities.
The administration and encountered by commercial banks in credit creation and also will be collection procedure.
Wema Bank Plc Mokola Ibadan Branch
chosen as a case study was visited to collect the necessary material and
a cross section of their customers.
1.6 LIMITATION OF THE STUDY
This project work is prone to some
constraints since it will not be easy if not impossible to carry out
study of all banking organization.
Also, the cost of writing material and
other stationeries are also one of the constraints facing the
researcher, other limitations was insufficient time for collection of
data in writing the project work and combining it respondents to reasons
for limitation in the case study.
Furthermore, there is a problem arising
from collection of questionnaire from respondents, when administering
the questionnaire assumed that the respondent were answer question
objectively and without any bias, some customers are illiterates and
hence some questionnaire left un-answered also questions are given in
1.7 SIGNIFICANCE OF THE STUDY
It is a fact that the problems of credit
creation in banking industry in Nigeria brings an end to surverness of
people in the country in an organization, the most critical executive is
the accomplishment of the corporate objectives varies and differ from
the organization to the other. Commercial Banks may offer them and how
to take advantage of such opportunities to improve upon their economic
The study may open the eyes of the
general public to the usefulness of banking for economic i.e progress
and prompt, more people to patronize commercial banks which will look
effect of having large profit by banks.
This project work provide some general practicable approach and theory in creation of credit in Banking Industry.
1.8 DEFINITION OF TERM
1. CREDIT CREATION:- This is the process of distributing of find to potential by djlending and borrower in bank.
2. CHEQUE:- A bill of exchange drawn on a banking payable on demand.
3. COMMERCIAL BANK:-
A financial institution set up for keeping and lending money to people
owned by an individual, organization or Government. Examples are: U.B.A,
WEMA BANK, G.T.B. e.t.c.
4. LOAN:- This is a bank money that bank gives its customers that met the requirement for such money.
5. OVER DRAFT:- This type of credit facility are enjoy by those who own a current account.
6. CREDIT TRADING: This is a type of credit which a trader provides to its customers.