Achaya (2007) investigated the determinants of loans and advances in the Nigerian financial system using data from 1970 to 2006. The secondary data collected from the central bank annual reports were analysed to confirm the appropriate relationship between the commercial banks’ loans and advances (dependant variable) and the determinants (independent variables). A multiple regression analysis was carried out to determine the relationship between both the dependant and the independent variables. While the results show that there is an inverse relationship with liquidity ratio and interest rate on one hand, it confirms that there exists a positive relationship between the dependant variable and capital base, likewise with bank deposit. The significance tests show that all the explanatory variables included were significantly different from zero. The study thus recommended that the new capital policy of the monetary authority is in the right direction and will boost the industry likewise and lending rate needs to be moderated to reflect market forces in the real sense.
Olokoyo (2011) examines predictors of the lending behaviour of Nigerian banks. The study considers volume of deposits, foreign exchange, investment portfolio, lending rate, liquidity ratio, minimum cash reserve ratio and gross domestic product as explanatory variables. Utilising time series data for the period 1980 to 2005, the vector error correction estimates indicate that while the coefficients of foreign exchange, investment portfolio, deposits and liquidity ratio have significant impacts upon the lending volumes, the coefficients of lending rate and minimum cash reserve ratio were insignificant implying that monetary policy instruments do not affect bank lending ...
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...bank level and macroeconomic determinants of bank long term loan behaviour. The regression model used is estimated using a sample of six countries from the CEMAC. To explain the bank-level cross-sectional variability in long-term business loans ratio, explanatory variables have been selected by relying upon the general existing literature on bank lending behaviour. More specifically, the study accounts for bank size, capitalization, liabilities structure, risk taking, ownership type, inflation and Gross Domestic Product (GDP) growth. The results of the study indicate that banks’ ability to extend long term business loans depends on size, capitalization, GDP growth and the availability of long term liabilities and availability of long term liabilities. These results underline the importance of supply side constraints in extending vital long term credit to firms.
As a means to assist small businesses during the recession, the current US administration proposed to increase the loan size cap for standard CDC/504 and 7(a) loans to $5 million. A similar proposal ...
In 1913, the Federal Reserve System was enacted, it has three primary objectives; eradicating the “pyramiding” of reserves in New York City and substitute it with a polycentric system of twelve reserve banks, which will help the banks with a more seasonal elastic supply of credit and minimize the tendency for banking panics (Calomiris, 1993). The discount rate that is set by the Federal Reserve System is used for interest rates charged to the commercial banks and other banks for overnight loans (discount window) borrowed from the Federal Reserve (Board of Governors of the Federal Reserve System, 2013). By discounting the loan rate, the banks would have lower liquidity problems because banks are able to borrow at a lower rate, which then reduces the pressure in the reserve markets and keeping the financial markets constant. To help the depository institutions, primary credit, the Federal Reserve Bank developed three rates of discount window, namely primary credit, secondary credit and seasonal credit.
Niger, home of the free flowing Niger River, is a Sub-Saharan, western African nation. Sadly, it is an extremely poor country because part of the country is desert and less than 3% open for crop use. The present economic situation is bleak at best. Yet, the vibrant tradition and history of this country lives today in its tribes and its people even through all of its adversities. From severe droughts to military coups to a dysfunctional government to the culture has stayed strong.
The first major aspect of the monetary policy by the Federal Reserve is its interest rate policy. This interest rate policy is mainly determined by the figure for the federal funds rate, which is the rate at which commercial banks with balances held within the Federal Reserve can borrow from each other overnight in ord...
The central bank is a financial institution that organizes the government’s finances, controls money and credit of the economy and assists as the bank to commercial banks. The roles of the central banks are to create money and develop Monetary Policies. Monetary Policy can be used to give assistance in the way an economy is currently operating in. Monetary Policy has two effects, expansionary policy and restricted policy. Expansionary policy helps lower interest rates and raise inflation in the economy; this policy improves growth for short run for the overall performance of the economy. On the other hand, restricted policy does the exact opposite of expansionary. Restricted reduces growth and inflation in the economy. Another role of the central banks is to manage the payments system by the inter-bank payments. This role of the central banks provides loans during times an economy is not operating at its financial capacity. Lastly, the central bank oversees the commercial banks, where the central banks ensures that the financial system provides citizens confidence in their soundness. The objectives of the central banks are to provide low, stable inflation, high economic growth, stable financial markets, interest rate stability and exchange rate stability.
The bank failure in Jamaica illustrates how negative mindsets and behaviors can devastate the financial system and disrupt economic growth. The primary role of any bank is to safeguard its customer’s money, offer interest rate on deposits, lend money to creditworthy individuals, and make sound investment decisions to maximize shareholder value. Because of rapid economic growth between the late 1980s and early 1990s in Jamaica, the Central National Bank (CNB) and Worker’s Savings and Loans Bank (WSLB) loosened their monetary policies, provided preferential interest rates and extended credit beyond what was reasonable to members of its own board of directors, managing directors, and officers of the bank. These actions posed significant risks to the bank and its future.
The largest petroleum-producing nation in Africa is Nigeria. The petroleum company is the main contributing factor of the GDP in the West African nation, which is also the continents, most noticeable and populous reserves. Since Nigeria was under British control it has suffered socio-economic and political adversities for decades. Corrupt domestic militias and complicity of multinational corporations have rid the nation of its natural resources. The same corporations that are ridding the land and exploring the resources have hypocritically identified Nigeria as a major concern with regard to human rights and environmental degradation. The petroleum business in Nigeria dynamically impacts its economy so much that “oil and gas exports accounted for more than 98% of export earnings and about 83% of federal government revenue, as well as generating more than 40% of its GDP.” Just to be reminiscent on this fact, the petroleum business accounts for almost the entire exporting business of a country so it raises the question of, where is the income going and how is it bring redistributed?
The question to be answered in this paper is to what extent has the resource curse affected the Nigerian economy and government? Resource curse is a term that states the observation that countries that have a plethora of natural resources (e.g. oil, coal, diamonds etc.) usually have unstable political and economic structures (Sachs, 827). Nigeria is categorized as a nation that has succumb to the resource curse as it has an abundance of, and an overdependence on, oil, and a decreasing gross domestic product (GDP) (Samuels, 321-322). Nigeria is known for its specialization and overdependence on oil and according to Ross, nations of such nature tend to have high levels of poverty, large class gaps, weak educational systems, more corruption within the government, and are less likely to become democracies (Ross, 356). The political instability and regime change in Nigeria will be observed in this paper. The resource curse has greatly weakened Nigeria as it has led to the numerous regime changes, the hindering of the nation’s democratization, corruption in the government, as well as, civil conflict.
Borrow long-term loans from international banks – Long term loans are usually repaid within three to ten years, although some can exist for more th...
Access to capital and credit at various stages in the business life cycle is identified as the major hurdle by the entrepreneurs. For many small firms and most start-ups, the personal funds of the business owners and entrepreneur and those of relatives and acquaintances constitute as the major source of capital. For many small businesses, especially during the early years of their operation, credit is simply not available. For many others, the limited available credit is not through bank loans. Due to this many of them rely on multiple credit card balances and home equity loans as major sources of credit for start-up firm. Because banks are bound by laws and regulations to prudent lending standards that require them a risk management assessment for each loan made. These regulations were made more vigor during the late 1980'' and early 1990 . Banks always found that lending to manufacturing firm with hard asset such as property, equipment, and inventory has always been easier than lending to today's expanding service sector firms. Because the service sector firms own few hard asses, therefor lending judgment have to be based in terms of character, markets, and cashflow, which make it difficult to the bank to meet the regulations for the approval of the loan. Additional, the banking industry, as well as the entire financial sector of the
Smaller companies are much more likely to obtain an attentive audience with a commercial loan officer after the start-up phase has been completed. In determining whether to extend debt financing--essentially, make a loan--bankers look first at general credit rating, collateral and your ability to repay. Bankers also closely examine the nature of your business, your management team, competition, industry trends and the way you plan to use the proceeds. A well-drafted loan proposal and business plan will go a long way in demonstrating your company's creditworthiness to the prospective lender.
Corruption can be defined as the use of entrusted power to accumulate public wealthy for personal benefit. Corruption is not peculiar to any country, continent or state; it is sure a global issue which is an endemic to all government all over the world. However, corruption is prevalent in the Niger delta region of Nigeria; public officers in this oil producing state of Nigeria are corrupt. Consequently, it has defied the Niger delta from developing politically and economically which has left the states reputation in a mess. Radicalization of youths, abject poverty and -political instability are the three leading effects of corruption in the Niger delta region of Nigeria.
Nigeria was first colonized by the British in the late nineteenth century who, set up an administrative structure and law while still recognizing the traditional morals. By 1960, Nigeria became an independent country and officially became known as the Federal Republic of Nigeria. Nigeria is located in West Africa and consists of 36 states with over 500 different ethnic groups. The country recognizes itself as a federal constitutional republic and has an open to the public type government. Since it was originally established by Britain, the Nigerian legal system is very traceable to them and originated its laws from common law. This paper will examine the culture of Nigeria, the fundamentals of its’ legal system and how laws are passed, legal actors that are part of the Nigerian criminal justice system, and will compare Nigeria to America.
Banks sector is playing an important role in economies. The banking industry, as the classic and the most influential of financial intermediaries, facilitates economic operations. Financial sector in the worldwide country has been changes over these years by looking the changes of financial structure environment and economic conditions. Thus, banks are a very important point to financial system and play an important role as control and contribute growth to the economic sector.
Financial institutions (banks and other lending companies) use them to decide whether to grant a company with fresh working capital or extend debt securities (such as a long-term bank loan or debentures) to finance expansion and other significant expenditures.