Select Currency
Translate this page

THE IMPACT OF QUALITY LENDING ON BANKS PROFITABILITY

Format: MS WORD  |  Chapter: 1-5  |  Pages: 69  |  1310 Users found this project useful  |  Price NGN5,000

  DOWNLOAD THE FULL PROJECT

THE IMPACT OF QUALITY LENDING ON BANKS PROFITABILITY

 

ABSTRACT

This research presents the investigation into the impact of qualiy lending on banks profitabilty, GT bank in Otta Ogun state was used as the location for the study and a total of 100 staff was sampled. Data was gathered using a self -constructed questionnaire and the result gotten was analyzed using the simple percentage method, chi square was also used for the testing of the hypothesis.  The validity and reliability of instrument were ascertained. The result of the study reveals that there is positive impact of quality lending on bank profitability, the study however recommend that monetary authorities should monitor the bank lending rates and make appropriate interventions. Specifically, in the event of poor performance of commercial banks, the authorities should facilitate the enhancement of the banks’ profitability with a monetary policy that would lead to a rise in interest rates.

 

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

Realizing a good quality product in the market (whether it is a physical or service product) gives benefits to both organization as well as their customers. “Quality means a process through which a business seeks to ensure that product or service quality is maintained or improved and errors are reduced or eliminated. Quality requires the business to create an environment in which both management and employees strive for perfection. This is done by training personnel, creating benchmarks for quality, and testing products or services to check for statistically significant variations (Adewale 2013)

Bank is a financial institution that undertakes the banking activity i.e., it accepts deposits and then lends the same to earn profit. Lending or extending credit to needy persons is a major bank product. Quality lending’ and ‘Credit Risk’ is interrelated. Credit Risk is inversely proportionate to Quality lending.  Credit Risk will decrease, if Quality lending increases and vice versa.  Due to poor quality lending, banking industry is suffering with huge Non-performing Assets (NPAs). Thereby higher provisions for NPAs, lower profits, additional capital to maintain CRAR and decrease in rating of the bank etc are the side effects of poor quality of credit or lending.

Agier and Assuncao (2009) contend that financial relations all over the world, have been deeply transformed in the last two decades. This has been characterized by new products, new markets and new regulatory systems which have radically altered the environment in which financial institutions operate, opening new profit opportunities but also creating new risks. Today’s modern and competitive financial atmosphere influence banks to improve their service quality and follow new technologies all over the world. Nigeria is no exception to these effects and almost all industries including the banking sector. Commercial banks private are providing varied services to attract the customers’ community since it is treated as assets of banks (Moya 2009). Shatto & Singer (1996) points out that for retail bankers to meet the changing preferences of the customers and to stay ahead of competitors they are bound to provide quality and efficient services. In the lending business banking has to be distinguished from transaction based on lending in particular? Both variants are reflected in the underlying credit processes.

The distinguishing feature of banks with a relationship approach is the ability to gain and to use qualitative information for customer evaluations. In contrast, the granting of credit in transaction-based lending occurs based only on “hard,” quantitative information (Berger, 2002). The theory of financial intermediation suggests that lending has a bright side and a dark side (Boot 2000). Strong bank-borrower relationships help reduces asymmetric information between lenders and borrowers, the bright side. But, at the same time, these relationships can create hold-up problems whereby the lender captures the borrower to extract rents, the dark side. Hence, the overall effect of quality banking relationships is a trade-off in costs and benefits between lenders and borrowers through interactions across time, space, and financial products.

Different empirical evidences suggested that profitability of financial institutions specifically banks are affected by internal and external factors. Andreas and Gabrielle (2009) stated that Bank profitability is usually measured by the return on average assets and is expressed as a function of internal and external determinants. The internal determinants include bank-specific variables. The external variables reflect environmental variables that are expect to affect the profitability of banks. Internal factors such as capital adequacy ratio, asset size, asset quality, net-worth, liquidity, earnings quality, loan performance, business risk, management quality, people, technology and operating environment are major determinant that are used to analyzed the determinants of bank profitability. An external macroeconomic and industry-specific factor includes Effective tax rate, Real GDP growth, inflation, and regulation and Bank concentration. Banks profitability is given due attention after the great economic depression is experienced in the United States of America in 1940s.

Due to United State sub-prime mortgage crisis that happened recently in 2007-2009, the banking sectors of many countries suffer huge losses, especially United State of America and European Union countries. The poor performance of the banking industry has slowed down the United State of America economy and also the growth of global economy until current period. In Asia, although the losses in banking sectors are not as serious as U.S., it is also hurting the economy. If the banking industry does not perform well, the effect to the economy could be huge and broad. Because, banks are the critical part of financial system, play a pivotal role in contributing to a country`s economic development (Rasidah and Mohd 2011).

1.2  STATEMENT OF THE PROBLEM

Increased competition among financial institutions coupled with financial distress and unpredictable economic conditions there is need for these firms to understand how well they can use the concept of quality lending to increase their profits. Petersen and Rajan (1994) find that lending affects the quantity of credit more than the price, while other studies find that customers get either lower future contract prices. Also due to poor quality lending, banking industry is suffering with huge Non-performing Assets (NPAs). Thereby higher provisions for NPAs, lower profits, additional capital to maintain CRAR and decrease in rating of the bank etc are the side effects of poor quality of credit or lending, therefor this study is aimed at investigating the impact of quality lending on banks profitability using GT Bank as a case study.

1.3  OBJECTIVES OF THE STUDY

The main objective of this study is to find out the impact of quality lending on bank profitability, therefore specifically the study intends to:

1.  Find out the impact of quality lending on bank profitability

2.  Find out the factors that impede quality lending in commercial banks’

3.  Investigate other factors that impact profitability of banks

1.4  RESEARCH QUESTIONS

The following research questions were formulated from the objectives to guide this study.

1.  What is the impact of quality lending on bank profitability

2.  What are the factors that impede quality lending in commercial banks’

3.  Are there other factors that impact profitability of banks

1.5  SIGNIFICANCE OF THE STUDY

It is hoped that the findings of the study would be significant in various ways like; Banks would be able to have information that would guide it to improve on their profitability through quality lending. The findings would enable banks to champion its quality lending to all the stakeholders so that they can improve on their profits as a result of this concept. Other banking institutions would be able to understand the concept of quality lending from this study so that they can use the same to improve on the profits. The findings of this study would help institutions to be able to make relevant decisions based on the concept of quality lending. The regulators and the policy makers can use the finding as reference for policy guidelines on management and control of such organizations. They would be able to use the findings of the study to formulate viable policy documents that effectively address problems faced by the banking sector. These may relate to regulating those aspects that threaten to adversely impact on the operations and development of such organizations. This study would be important to the present theory because it would furnish those who are interested in this study area with relevant information.

1.6  SCOPE OF THE STUDY

This study will cover impact of quality control and bank profitability, the research will vividly discuss different factor that determine bank profitability like quality lending and some other factors, a theoretical framework will also be used to back up the research. Also the research will be conducted in GT bank.

  DOWNLOAD THE FULL PROJECT

THE IMPACT OF QUALITY LENDING ON BANKS PROFITABILITY

Not The Topic You Are Looking For?



For Quick Help Chat with Us Now!

+234 813 292 6373

+233 55 397 8005


HOW TO GET THE COMPLETE PROJECT ON THE IMPACT OF QUALITY LENDING ON BANKS PROFITABILITY INSTANTLY

  • Click on the Download Button above.
  • Select any option to get the complete project immediately.
  • Chat with Our Instant Help Desk on +234 813 292 6373 for further assistance.
  • All projects on our website are well researched by professionals with high level of professionalism.

Here's what our amazing customers are saying

Abdulrazak Bello Marsha
Usman Dan fodio University
It was quite a better guide for project and paper presentation purpoting. Many thanks.
Average
Uduak From Uniuyo
IProjectMaster is the best project site for students. Their works are unique and free of plagiarism!
Excellent
Gbadamosi Solomon Oluwabunmi
Lasu
Swift delivery within 9 minutes of payment. Thank you project master
Excellent
Temitayo Ayodele
Obafemi Awolowo University
My friend told me about iprojectmaster website, I doubted her until I saw her download her full project instantly, I tried mine too and got it instantly, right now, am telling everyone in my school about iprojectmaster.com, no one has to suffer any more writing their project. Thank you for making life easy for me and my fellow students... Keep up the good work
Very Good
Emmanuel Essential
Kogi state University
I actually took the risk,you know first time stuff But i was suprised i received as requested. I love you guys 🌟 🌟 🌟 🌟
Very Good
Peace From Unilag
I cried not knowing how to go about my project but the day i searched online and saw iprojectmaster, i called and got my full project in less than 15minutes, i was shocked!
Excellent
MATTHEW NGBEDE
Ahmadu Bello University
I wish I knew you guys when I wrote my first degree project, it took so much time and effort then. Now, with just a click of a button, I got my complete project in less than 15 minutes. You guys are too amazing!
Excellent
Azeez Abiodun
Moshood Abiola polytechnic
I actually googled and saw about iproject master, copied the number and contacted them through WhatsApp to ask for the availability of the material and to my luck they have it. So there was a delay with the project due to the covid19 pandemic. I was really scared before making the payment cause I’ve been scammed twice, they attended so well to me and that made me trust the process and made the payment and provided them with proof, I got my material in less than 10minutes
Very Good
Joseph M. Yohanna
Thanks a lot, am really grateful and will surely tell my friends about your website.
Excellent
Samuel From Ajayi Crowther University
You guys just made life easier for students. Thanks alot iprojectmaster.com
Excellent

FREQUENTLY ASKED QUESTIONS

How do I get this complete project on THE IMPACT OF QUALITY LENDING ON BANKS PROFITABILITY?

Simply click on the Download button above and follow the procedure stated.

I have a fresh topic that is not on your website. How do I go about it?

How fast can I get this complete project on THE IMPACT OF QUALITY LENDING ON BANKS PROFITABILITY?

Within 15 minutes if you want this exact project topic without adjustment

Is it a complete research project or just materials?

It is a Complete Research Project i.e Chapters 1-5, Abstract, Table of Contents, Full References, Questionnaires / Secondary Data

What if I want to change the case study for THE IMPACT OF QUALITY LENDING ON BANKS PROFITABILITY, What do i do?

Chat with Our Instant Help Desk Now: +234 813 292 6373 and you will be responded to immediately

How will I get my complete project?

Your Complete Project Material will be sent to your Email Address in Ms Word document format

Can I get my Complete Project through WhatsApp?

Yes! We can send your Complete Research Project to your WhatsApp Number

What if my Project Supervisor made some changes to a topic i picked from your website?

Call Our Instant Help Desk Now: +234 813 292 6373 and you will be responded to immediately

Do you assist students with Assignment and Project Proposal?

Yes! Call Our Instant Help Desk Now: +234 813 292 6373 and you will be responded to immediately

What if i do not have any project topic idea at all?

Smiles! We've Got You Covered. Chat with us on WhatsApp Now to Get Instant Help: +234 813 292 6373

How can i trust this site?

We are well aware of fraudulent activities that have been happening on the internet. It is regrettable, but hopefully declining. However, we wish to reinstate to our esteemed clients that we are genuine and duly registered with the Corporate Affairs Commission as "PRIMEDGE TECHNOLOGY". This site runs on Secure Sockets Layer (SSL), therefore all transactions on this site are HIGHLY secure and safe!