Project Materials


An empirical analysis of the effects of bank loans on the development of the Nigerian industrial sector from 1980 to 2006

An empirical analysis of the effects of bank loans on the development of the Nigerian industrial sector from 1980 to 2006

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An empirical analysis of the effects of bank loans on the development of the Nigerian industrial sector from 1980 to 2006

This project is a study of the Nigerian financial system, which is the primary driver of economic activity, as well as a case study of a Nigerian bank for commerce and industry. According to the findings of this study, the financial system has been of enormous assistance to our economy, particularly entrepreneurs.

During the course of this investigation, it was discovered that the financial system has greatly aided in the growth of our communities and has also been of tremendous use to both agriculture and sole proprietorships. During the research period, I used a variety of methodologies, including data collecting, questionnaires, observations, and secondary data.


Background of The Study

Every economy is comprised of numerous economic units and agents. Individuals, households, various forms, businesses, and the central authority are all represented here. It requires funding to continue its business activities. These units involved in manufacturing, distribution, or consumption may require the use of other agents’ goods and services facilities.

In the modern economy, specialisation and minute elivision of work have resulted in enterprises specialising in many ways. Some of these businesses deal with real goods and services, while others focus on money and credit. The latter deal solely in financial assets and obligations. It is the specialisation that connects different parts of the financial sector and different parts of the economy.


Financial institutions provide a variety of functions in an economy. There are both financial and non-financial institutions. The former ensures that there is a sufficient supply of money to meet the needs of the economy. Central banks and commercial banks are examples of financial institutions.

Through their acts, these institutions have the ability to increase or diminish the supply of money. However, they later facilitate money transfers between economic entities. Both institutions’ actions have an impact on the level of employment. Income and prices (economic activities) demonstrate that the financial system is the primary driver of economic activity.


Statement of the Problem

This study/research entitled the Nigerian financial system as the major mover of economic activities and seeks to determine the Nigerian financial system as the prime mover of economic activities in comparison to others, as well as the best credit financing for small size firms.

This is done to determine the bank’s actual performance as a financial institution in terms of loan seize, credit profitability, and so on. The topic here is whether it is reasonable to assert that small scale firms gain significantly from finance houses (banks) in terms of capital provision.

Finance organisation is typically one of the key issues for small and medium-sized businesses.


This research will compare bank performance to other sources of credit available to small scale industries in order to determine which of these loan sources is most useful and important to small scale enterprises.

Another issue is a lack of time; because this study is only one of many courses taught by the researcher, she was unable to conduct extensive research on the topic in question due to time constraints. She also lacks the funds to search high and low for appropriate resources for this inquiry.


The Objectives of the Research

In light of some industrialists’ concerns, the goal of these research is to assess the role of financial institutions in financing economic activities. For economic activity to occur, money must be made available to economic units.

The specific goals are as follows:

To identify the challenge that economic activity face in obtaining bank financing.

Financial institutions provide liquidity by allowing near-money assets to be converted into manager. Time deposits in banks, treasury bills, stock and bond certificates, and commercial bills are examples of near-money assets.

They organise the collecting and storage of savings.

To assess the situation and give recommendations on how to strengthen the financial institutions.

Financial institutions highlight the extent to which commercial banks have aided in the financing of economic activity as well as the issues that have hampered such financing.

To protect against hazards inherent in the economic units’ day-to-day operations. Function specialisation has encouraged the establishment of financial institutions to insure against and so mitigate the impact of risk.

The Significance of the Study

The study’s relevance is to assess the extent to which economic activities have been able to acquire financial system support in capital funding for their businesses. The study will be significant since it will give data for future studies on the subject. Thus, the study will benefit students who wish to conduct research on a relevant topic in the future because a foundation has already been created.

Industries will gain since the research effort will disclose any issues in the link between banks as a financial institution and economic operations.

It has been disclosed that it will and borrowers to act loans easily and without many hassles.

Finance houses will benefit because the true role they play in economic activity funding will be revealed. This provides them the confidence to approach the federal government for a loan when necessary.

Individuals will benefit as well because when banks lend to industrialists, it helps to ensure that people’s needs are met, if not completely, then to a large enough level that a large number of people will benefit.


Scope of The Study

This subject The Nigerian financial system, as the primary driver of economic activity (A case study of Nigerian Bank for Commerce and Industries (NBCI) Enugu), is large, yet it is restrained by financial constraints. As a result, it has restricted or limited itself to a few select banks in Enugu state.

In selecting these banks, the research has invited his research in those areas of operation of these institutions that increase Nigerian economic emancipation and used examples derived to apply to other development financial institutions.

This is because the research assumed that all financial institutions tasked with the sole duty of small-scale industry had the same goals and objectives: to improve small-scale industry as an economic activity.


Definitions of Term

The Nigerian Bank for Commerce and Industry (NBCI), which is currently highly active in promoting small companies, defines a small scale industry as one that employs up to N500.00 Ezeye (1990).

In most circumstances, the various definitions appear to be dictated by the perceived’s interest. The definition’s purpose is the stage of development at which it is used.

A small firm is generally characterised as one that is owned, controlled, and influenced by one or two people, has no homogenous organisational structure, has a limited market share, and employs less than fifty (50) people.

The National Economic Reconstruction Fund (NERFUND) characterised various economic activity, such as small scale industries, as having fixed assets worth less than N10 million. The central bank, on the other hand, considers any business with an annual revenue of less than (N500,000) five hundred thousand naira.

Role: For the purposes of this study, role shall include and include all roles played and exhibits by financial institutions.

Loans: A loan is a transfer of funds from one economic entity to another that must be repaid with interest over a certain time period.

Credit is derived from the Latin words “Credo,” which means “I believe.” It denotes the capacity to command another’s capital in exchange for a commitment to repay as stipulated in the future.

Finance is concerned with the availability of money and capital goods for investment in industries to increase output.

Industrialization: This is a strategy that encourages the development of new industries.

Money is defined as anything that is universally accepted in a specific community or locality as a means of exchange and debt settlement.

Short Term Loan: A source of funds with a short maturity time.

Hypothesis of Investigation

The following assumptions are made during the course of this study:

Apply for commercial bank loans on a regular basis

Apply for loans from the Nigerian Bank for Commerce and Industry (NBCI) on a regular basis.

An increase in bank loans will lead to an increase in industrial production.

Remember that any society’s financial system is the framework within which capital development occurs. It is a framework in which some members of society’s savings are made available to other members of society for production investment.

Researcher Questions

The study seeks to address the following questions based on the problem statement:

– Do you believe banks are necessary?


Yes [ ] No [ ]


– Have there been any changes in the way the financial system operates? Yes [ ] No [ ]

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