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The Impact Of Inflation On Bad Debts Of Financial Institution
[A CASE STUDY OF UNION BANK OF NIGERIA PLC ILORIN]
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1.2 STATEMENT OF THE PROBLEM
The impact of inflation on bad debts, which cut across all share of business society in Nigeria. Recently, the incidence of inflation has been the focused of government attention. In this project attempt will be made to analyse inflation causes and effect of the growth of the backing system in particular and the overall development and likely solution with a view to minimize it frequent occurrence detail of this may be found in next chapter.
1.3 THE NEED FOR THE PROBLEM
The need for this project study has been amplified by the economic depression in which Nigeria has found here self in the past fourteen years the depression has brought with its economic problems which include huge foreign and interest debts high unemployment, severe raw materials and severe parts shortages, high rate of inflation and rapidly declining per capital income.
The economics twist of fate of Nigeria that proper her departure from can era of economic boom in the mid seventies and eighties to a period of prolonged depression is first and foremost to the sharp decline in revenue derivable from crude oil.
The depression economy can also be attributed to economic mismanagement by Nigeria leaders misplaced priorities, neglect of agriculture which can another veritable source of foreign exchange earnings, general depression in the world economy, high level of deficits spending by government and excessive imports which are not at par with exports consequent upon the dull economic climate therefore, may loans and overdrafts facilities granted by commercial banks to individuals and corporate bodies the past are no longer being regularly services may of the facilities which are totally bad are now abandoned.
The growing brand of bad debt in the book of commercial banks is now a cause for concern to leading banker’s failures to pay an existing debt limits the credit creation capability of banks and this limitation will affect economic production the volume of which is always influence by the availability of credit.
When production capacity can not be enlarged, new employment cannot be credited, when plant are under utilized labour gets retivialized or totally discarded.
There is need therefore, to look at the correction between the prevailing economical depression and the increasing failure rate of banking lending which in affect can affects banks profitability and jeopardize their shareholders return on investment.
1.4 SCOPE AND LIMITATION OF THE STUDY
It would be very unrealistic have been gathered in the process of this study this is so because the information gathered is limited to those available by the respondent, financial experts analysts, economist and accountant such information provided may not be tree bases, hence a source of inadequacy of findings.
Information that relate to inflation on bad debt is kept confidential, regardless of the purpose for which they are intended. Hence, a general a pathy and reluctance to provide answer to the question asked willingly and truth fully.
1.5 THE SIGNIFICANT OF THE STUDY
The significance of the study stems from the assumption that the attack on the impact of inflation on bad debt was originally incurred by business promoters to finance the acquisition of one thing or the other. The purpose could be an item of fixed asset, it could also be for the purpose of financial working capital what ever the case may be, inflation as it is the case in the Nigeria economy has an unfolding impact of the performance of fixed asset financed by back loan and the adequacy or other wise of the firm’s working capital.
1.6 OBJECTIVE OF THE STUDY
One of the main objectives of the study is to analyze the impact of the inflation on bad debts in union Bank through effective debt management. It is also the objective of this study to suggest ways and means by which loans liquencies can be drastically reduced through effective lending controls.
To be able to achieve these objectives, it will be necessary to ascertain the means of inflation and to show it affect bad debts and their financial intermediation role to the economy.
Although, the study, as union bank of Nigeria Plc in view the project work is to serve as a relevant working paper and guide to other commercial bank in Nigeria.
1.7 DEFINITION OF TERMS
Inflation: Inflation is the persistent rise in general level of goods and services. It is also a period in which there is a rise in the general level of price measured by price indexes.
Moderate inflation: Moderate inflate occurs
When prices are rising slowly
Galloping inflation: Galloping inflation occurs when price start rising at double prices
Hyper inflation: Hyper in inflation is a period of extra-ordinary rises in price
Bad debt: It is the money that can no be recovered
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ABSRACT - [ Total Page(s): 1 ]ABSTRACTThis project work was written on the Impact of Inflation on Bad Debts In Nigerian Banking Industry.Since an organization is an integrated system of activities in achieving some aims or objectives, it is therefore necessary to involve some plans, processes for the effectiveness and efficiency of the Banking Industry. The sample of 80 respondents are to be used and the method of sample will be random sampling.This study will be carefully planed to look into the Impact of Inflation on Bad D ... Continue reading---
