TABLE OF CONTENTS
1.1 Background of the study
1.2 Statement of the problems
1.3 Research Questions
1.4 Research Hypothesis
1.5 Objective of the study
1.6 Scope of the study
1.8 Limitation of the study
1.9 Significance of the study
1.10 Definition of terms
2.1 Literature Review
2.2 Credit policy and its
development in Nigeria
2.3 Credit policy implementation
2.4 Credit policy programmes and
3.2 Source of data and collection
3.3 Research design
3.4 Statement of research questions
3.5 Restatement of research
3.6 Model specification
3.7 Assumption of ordinary least
3.8 Regression analysis
4.2 Data extracted
4.3 Presentation of results
5.1 Summary of the study
5.4 Suggestions for further studies
BACKGROUND OF THE STUDY
The survival of any company or
organization will require research and development, new product improvement, modern
facilities, wider market and other manifestation of growth. Financing this
growth will bring the entrepreneur into the world of financers in form of
credit from banks and other investment bankers.
Garner et al (1991) noted "As
an entrepreneur of a small or medium scale company, one of the most interesting
and potentially rewarding experience is capital to take advantage of growth
According to the prudential
guideline (1990) credit facilities is the aggregate of all loan, advance, and
overdraft from banks, trade credit, Debentures, leases guarantees and other
loss contingencies connected with bank's credit risk.
The birth of the Nigeria
Agricultural Co-operative and Rural Development Bank (NACRDB) limited as the
single largest development finance institution in Nigeria followed the
successful merger of the former People's Bank of Nigeria (PBN); the defunct
Nigeria Agricultural and Co-operative Bank (NACB) Limited, and the Risk Assets
of the Family Economic Advancement Programme (FEAP) in October, 2000.The
Nigeria Agricultural and Co-operative Bank (NACB) began operation on the 6th
of March 1973 as Nigeria Agricultural Bank Limited before the merger.
Thus, Nigeria Agricultural
Co-operative and Rural Development Bank is dedicated primarily to agricultural
financing at both micro and macro levels, as well as micro financing of Small
and Medium Scale Enterprises. The bank also provides finance and credit
facilities to agro-allied industries, loans to farmers, agricultural
institutions, organizations and co-operative societies, direct investment by
way of equity participation in wholly or joint-ventures project, guarantees are
provided by the bank to viable agricultural and agro-allied ventures, and
lastly rural saving scheme are provided.
The bank is a registered limited
liability company that is wholly owned by the Government of the Federal
Republic of Nigeria with the share capital fully subscribed by the federal
ministry of finance incorporated 60% and the Central Bank of Nigeria (CBN)
40%.The bank's braid mandate encompasses saving mobilization and the timely
delivery of affordable credit to meet the funding requirement of the teeming
Nigeria population in the agricultural and non-agricultural sectors of the
The Nigeria Agricultural
co-operative and rural development bank has five lending channels of financial
support to its clients: firstly, the On Lending Scheme, which is done through
the co-operative financing agency (CFAs), Non-Government
organizations (NGOs), Self Help Group (SHGs) and some private sector,
Secondly, Small Bolder Scheme (SHs)
which are designed for small and medium scale individual and group farming
organization and funds are provided as loans on very favorable terms and
conditions. Interest charges are usually below the market rate.
Thirdly, First/Second Livestock
Development Programme (SLDP) which are designed for small and medium scale
individual and group farming organization and funds are provided as loans on
very favorable terms and conditions.
Fourthly, the special project which
is usually undertaken in collaboration with such international financial
institutions and donor agencies as IF AD, ECOW AS and ILO.
Lastly, Investment in projects that
is a target mainly for medium and large scale entrepreneurs who have the
capacity to provide collateral securities.
1.2 STATEMENT OF
Nigeria economy has witnessed
tremendous changes especially in the financial system. Since the advent of
Structural Adjustment programme in June 1986, many noticeable changes have been
brought to the Nigeria Banking industry in many dimensions.
• Ineffective repayment of loans issued
• There is problem of inability to cope with constant
changes of the policy measures.
• The size and structures of the industry as well as their
mode of operations and system are affected significally.
1.3 RESEARCH QUESTION
Relevant research questions
addressed in the research include;
• Does the credit policy has any negative effect on the
• Has the overall size of the bank expansion has anything
to do with the ability to give loan facilities to the economy?
• What has the effect of the credit policies in banking
sector to the economic growth?
• Has the credit policies in bank has any relationship with
• Has economic reform experience in banking sector's
HO: That the credit facilities given to the
economy by banks has no significant correlation to economic growth.
H1: That the credit facilities given to the
economy by banks has correlation to economic growth.
HO: That the activities of banking sector do not
have any relationship changes experiences in macroeconomic variables.
H1: That the activities of banking sector are
related to changes experience in macro-economic variables.
HO: That the activities of the banking sector does not have
influence on general Price level of the economy.
H1: That the activities of banking sector influence
on general price level of the economy.
OF THE STUDY
The major objectives of this study
is to verify the importance of the Nigeria Agricultural Co-operative and Rural
Development Bank (NACRDB) on credit policy administration towards the Nigeria
economic development to achieve the following Objectives;
To find out if the bank was partial
in administrating its credit facilities towards economic growth.
To what extent that the
bank exercise its leasing operations.
To identify special
problems arising from the bank.
To highlight the
advantages of the Nigeria Agricultural Co-operative Rural Development Bank
(NACRDB) as the main source of capital provider in the Agricultural sector.
OF THE STUDY
In other to obtain an objective
result and to facilitate the completion at the research work within the
scheduled period, the study would be limited to the Nigeria Agricultural Cooperative
and Rural Development Bank (NACRDB), to determine the various companies within
the period of 2001- 2006 and the uses they have been put by the beneficiaries.
The area of coverage at this research includes;
The time frame which
will cover a period of 5years and also it is expected to be submitted within a
The institution covered
is Nigeria Agricultural Cooperative and Rural Development Bank (NACRDB).
The geographical scope
which is restricted to Nigeria and consequently, it does not look into the
international Agricultural market.
The research methodology used for
this study is Multiple Least Square method (MLS). In form of Y as multiple
F (X1, X2, X3, X4....e.t.c.)
?O + ?X1 + ?2X2 + ?3X3….e.t.c).
To be analyzed using Spss which is
the statistical package for social scientist.
1.8 LIMITATIONS OF
There were difficulties in
obtaining the published financial report of the Nigeria Agricultural
Co-operative and Rural Development Bank: (NACRDB). This contributed to delay in
concluding the research, as several trips were made to the institutions
• Difficulties in having access to companies or organizations
that have overtime or the other sourced funds in NACRDB.
• Difficulties in having access to the officers,
executives, managers to be interviewed.
Consequently, the use of published
Annual reports of Nigeria Agricultural Co-operative and Rural Development Bank
(NACRDB). Provide the best alternative method in this research.
OF THE STUDY
The study would be of tremendous
help to many group of people in our society, Basically, should be beneficial to
government, policy, formulators, students, managers, entrepreneurs and the
Firstly, it will help them to know
the various problems going on within the area of concentration.
Secondly, it would enable the
government policy formulators to examine the implication of Nigeria
Agricultural Co-operative and Rural Development Bank (NACRDB) on the performers
of the farmers in Nigeria.
Moreover, the finding of the study
should provide reference materials to scholars and researchers that might want
to embark on similar studies.
CREDIT POLICY: This
is a policy that exists in a credit granting organization. It is the
identification and specification of credit objectives which define the line of
responsibilities tor credit administration.
MICRO CREDIT LOAN SCHEME: These are scheme
that are meant to access small-scale enterprises to loan facilities.
MICRO FINANCE: This is a way of funding or financing
organizations in a small scale.
MACRO FINANCE: This
is the opposite of micro finance in which financing is made to organization in
a large scale.
are financial credit given to individuals, firms and organization over a period
of time before repayment. It can either be short-term loan or long-term loan.
Short-term loan are usually 1-5yrs while long-term loan are 5years and above. Collateral
securities are usually provided.
OJO ADE .I. and
ADEWUNMI WALE (1980) Co-operative Banking in Nigeria (Lagos; University
of Lagos press).
NWANKWO G.O. Nigeria
financial system. (Macmillan press 1990) Lagos.
ADEOLA A. (2004) Internationalization
of financial services, challenges for financial sector stability in Nigeria.
CBN Bullion vol 28 No. 1 Jan - March 2004.