THE EFFECT OF LOAN MANAGEMENT IN RELATION TO BANK'S PROFITABILITY

THE EFFECT OF LOAN MANAGEMENT IN RELATION TO BANK'S PROFITABILITY

Statement of the problem

        The bank’s ability to generate significant profit from loans and advances is constrained by the regulatory authority (CBN). In view of this, the bank must as well achieve their objective of profitability through the institution of sound credit appraisal framework in their lending operations.

        The problem encountered in loan management is due to the default in the repayment of this loans, inexperience staff to manage this loan and invaluable collateral provided to cover this loans been given out, non performing credit and so on.

       Hence, the problem of this study revolved around loan management and review process as it affects the profitability of first Bank of Nigeria, since poor management of loan portfolio could adversely affect bank’s profitability.

1.3 Objectives of the study

        The effective performance of lending function of commercial banks has loans support and promote growth of new businesses and jobs within the bank’s trading territory and also promote economic liability (Rose, 1996). The prime objective of the study is to appraise the effects of loan management on the profitability of banks. However, the study also intends to;

1. Examine the benefits of effective loan management on profitability of banks.
2. Identify the relationship between an effective loan management framework and the profitability of banks.
3. Show the extent to which the relationship in (1) favors the achievement of the profit maximization of the banks.
4. To make the policy makers realize the importance of formulating sound loan management framework for the bank.

1.4 Research Questions       

            On the premises of the objective of the study with the aim of providing a solution to the problem identified earlier, the study attempts to provide answers to the following research questions.

1. Is there any relationship between an effective loan management framework and the profitability of banks?
2. Is there any relationship between loans and advances of the bank and its asset base?
3. Does sound credit analysis the incidence of the bad debts in banks?

BUY THIS TOPIC ON WHATSAPP

Related Project Materials

Abstract

This work was carried out to appraise the Cost Reduction Techniques and Productivity in a Manu...

ABSTRACT

Analysis of data to determine how much knowledge the American University of Nigeria food service has on sustainability as well a...

ABSTRACT.

One way to investigate the physics of a medium is to study the forces on intruders moving through the media. A special case of...

ABSTRACT

This study is geared towards finding  out the  role of television in political  mobilization of rural areas i...