TABLE OF CONTENT
1.1 BACKGROUND OF THE STUDY
1.2 STATEMENT OF THE PROBLEM
1.3 OBJECTIVE OF THE STUDY
1.4 RESEARCH QUESTIONS
1.5 FORMULATION OF HYPOTHESIS
1.6 SIGNIFICANCE OF THE STUDY
1.7 SCOPE OF THE STUDY
1.8 LIMITATION OF THE STUDY
1.9 OPERATIONAL DEFINITION OF TERMS
2.1 CONCEPTUAL FRAMEWORK
2.2 THEORETICAL FRAMEWORK
2.3 EMPIRICAL FRAMEWORK
3.1 RESEARCH DESIGN
3.2 POPULATION OF THE STUDY
3.3 DETERMINATION OF SAMPLE SIZE
3.4 SAMPLING TECHNIQUES
3.5 METHODS OF DATA ANALYSIS
DATA ANALYSIS AND PRESENTATION OF RESULT
4.1 DISTRIBURTION AND COLLECTION OF QUESTIONNAIRE
4.2 TEST OF HYPOTHESIS
SUMMARY OF THE FINDINGS CONCLUSION AND RECOMMENDATION
5.1 SUMMARY OF FINDINGS
This paper examines the role of commercial banks in the performance of small medium enterprises development in Nigerian. In doing this, the Ordinary Least Squares Method (OLS) is used to analyse data between 1981 and 20016. The result of the analysis shows that banks policy presented by money supply exerts a positive impact on GDP growth and Balance of Payment but negative impact on rate of inflation.
The recommendations are that monetary policy should facilitate a favourable investment climate through appropriate interest rates, exchange rate and liquidity management mechanism and the money market should provide more financial instruments that satisfy the requirement of the ever-growing sophistication of operators.
Keywords: Commercial bank, economic growth, transmission mechanism and liquidity.
1.1 BACKGROUND OF THE STUDY
The post – independence Nigeria government adopted the entrepreneurship government which constrained it to assume the role of entrepreneur and the urge to offset the economic neglect of the colonial government and that resulted in engaging in ambitious industrialization programmers. When the Nigerian industrial Development Bank Limited (NIDB) was to promote industrial project which were large enough to make applicable contribution to the national economy. However, the collapse of the oil boom in the early 1980’s exposed the inherent weaknesses of this importation of inputs resulted in large idle capacities, thereby creeping many gross domestic product (GDP) declined in the face of the strong national aspiration for the restructuring of the economy and reduction of the dependence on petroleum. Small and medium scale enterprises have since become the focus of national industrial policy. In pursuit of self – reliance in a developing country particularly in Nigeria, the central government enacted a decree called “Enterprises promotion Decree” when there was need for small scale enterprises in the promotion of economic development. This has since been at the fore front of development strategies.
However, many development countries have failed to adopt these strategies owing to their belief that it is a relatively slow process of industrialization. Without the development of small scale enterprises in Nigeria, the nation’s quest for industrialization will certainly remain forever at a slow pace. It is the humble opinion of the researcher that further development on our business enterprise must add to the basic issue of creating linkage within the economy to begin to yield real inputs to our economic activities. Priority attention must therefore be given to those business enterprises for which domestic inputs could easily be produced. The objective should be to maximize the value added in their processing and manufacturing as final strong producer incentives to small scale enterprises are necessary not only to meet the food requirement but also to promote growing input supplier industrial growth. The present economy constraints may well turn out to be a blessing in disguise to our small scale industry effort particularly for the dynamic manufacturing sector. For instance, the market determined exchange rate through foreign Exchange Market with its resultant high cost of imported inputs may serve as an impetus for industrialist to intensify their search for loan substitute.
1.2 STATEMENT OF THE PROBLEM
Evidently, an important avenue for banks to boost the growth of the industrial sector of the economy is through efficient and effective saving investment process which ought to stimulate investment and productive activities. For the past three decades, the Nigerian economy has not shown any favorable sign of growth. For example, the real G N P growth rate figures was 2.8% in 1995 with negative figures in year like 1982 with 0.3% etc (as depicted in the C B N periodic bulletin 1986)
From this background we are therefore poised to answer the burning questions like.
- In what extent does commercial bank as a financial intermediate contribute towards funds mobilization for industrial growth and development of the country.
- is there any relationship between commercial banks financial industrial development growth in Nigeria
- What is the problems commercial banks encounter in their performance towards mobilization of fund for industrial development growth.
1.3 OBJECTIVES OF THE STUDY
The objectives of this research work are sated as follows
- To determine the role of commercial banks towards a positive industrial growth and development.
- To identify and analyze the constraints and short coming facing commercial banks in Nigeria towards und mobilization for industrial growth and development
- To examine ways in which the commercial banks in Nigeria can be made to play better roles towards fund mobilization for industrial growth and development.
- To determine and test the effect of some relevant economic variables and factors in the real gross domestic product (GDP) of Nigeria.
1.4 RESEARCH OF HYPOTHESIS
The following hypothesis are tested on this study
Ho; Commercial banks have not played a significant role in the industrial growth in Nigeria
H1: Commercial banks have played a significant role in the industrial growth in Nigeria.
1.5 SIGNIFICANCE OF THE STUDY
The usefulness of this study is that it will highlight to the nation as a whole on how best to manipulate commercial bank loans for financing in order to improve the state of industrial product in the country.
- It will also give the government an overview of constraint of industrial financing and how best to manage commercial bank loan in order to yield output.
- It will show commercial banks how to increase industrial financing for growth in the economy.
1.6 REASEARCH QUESTIONS
(i) Do commercial banks give loan for industrial financing?
(ii) If so, to want extent has the industrial sector growth since the assistance started.
(iii) Is there any relationship between commercial banks financing and the Nigeria industrial growth?
1.7 SCOPE OF STUDY
This study is designed to find out the role of commercial banks towards financing industrial activities in Nigeria. Emphasis is on United Bank for Africa (U B A)
During the 1960’s and early 1970’s most Nigerian engaged in industrial project did so on subsistence level but now emphasis has shifted to the sophisticated and capital intensive enterprises. Annual policies of the Federal Ministry of Nigeria in recent years have been to ensure that commercial banks provide needed capital to small scale enterprises to help 16 improve their present state. The study therefore sets out to ascertain the extent to which commercial banks have performed the role and the findings will help make recommendations and suggestions for future improvement of the present situation.
1.7 DEFINITION OF TERMS
- 1. Small Scale Enterprises As defined in Nigerian context, following the current official definition of industrial enterprises adopted by the 13th meeting of the National Council on industrial (NCI) Markudi, Benue State in July, 2001 as “an enterprise with total capital employed of over N50m but not more than N50m, including working capital but excluding cost of land and or labour size of 11 – 100 workers.
- Short term credit: This type of credit is a credit or loan that has maturity period that is less or more than one year. E.g. Personal loan.
- Medium term credit: This is a type of credit or loan that has a maturity period of more than one year but not exceeding tow years to be rapid back. E.g. loan required for temporary business requirement.
- Long term credit: This type of credit matures in more than three years and above. It has a very long maturity period as agreed by the lender and the borrower. E.g. are business development loans and Bridging loan