ABSTRACT The emergence of Banks owned by the local private sector began in the mid-1970s. Financial markets in the period since independence have been dominated by foreign and government owned commercial banks. But deficiencies in financial intermediation provided an opportunity for local private investors to enter financial markets. Between the late 1970s and the mid-1980s, 13 local Banks were set up in Nigeria. The growth of local banks accelerated dramatically in the second half of the 1980s, with 70 Commercial and Merchant Banks established between 1986 and 1991 when the Central Bank of Nigeria suspended issuing new licenses: almost all of these were wholly owned by local investors. In Nigeria, the rising cases of bank distress have also become a major source of concern for policy makers. As a result of attractive interest rate on deposits and loans, credits were given out indiscriminately without proper credit appraisal. The resultant effects were that many of these loans turn out to be bad. It is in realization of the consequence of deteriorating loan quality on the banking sector and the economy at large that this paper is motivated. This paper, therefore, attempts to evaluate the effect of risk management in bank lending, using Equitorial Trust Bank as a case study.

TABLE OF CONTENTS

Title Page … … … … … … … … … i

Dedication … … … … … … … … ii

Certification … … … … … … … … iii

Acknowledgment … … … … … … … iv

Abstract … … … … … … … … … vi

Table of Contents … … … … … … … vii

List of Table … … … … … … … … x

CHAPTER ONE: INTRODUCTION

1.1 Background of the Study … … … … … 1

1.2 Statement of the Problem … … … … … 8

1.3 Research Questions … … … … … … 10

1.4 Objectives of the Study … … … … … 11

1.5 Research Hypothesis… … … … … … 12

1.6 Scope of the Study … … … … … … 13

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1.7 Significance of Study … … … … … 14

1.8 Operational Definitions of Terms … … … 15

References … … … … … … … … 18

CHAPTER TWO: LITERATURE REVIEW

2.1 Introduction … … … … … … … 20

2.2 Types of Bank Credits … … … … … 22

2.2.1 Overdraft… … … … … … … 23

2.2.2 Loans and Advances … … … … 24

2.2.3 Special Credits … … … … … … 27

2.3 Constraints on Bank Credit Portfolio … … 29

2.4 Management of Portfolio … … … … … 30

2.5 Bank Consolidation in Nigeria … … … … 33

2.6 Credit Analysis … … … … … … … 35

2.7 Credit Risk Management and Prudential Regulation 40

2.8 Types, Analysis and Evaluation of Risk … … 43

References … … … … … … … … 52

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Introduction … … … … … … … … 53

3.2 Research Design … … … … … … … 53

3.3 Procedure for Data Collection … … … … 54

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3.4 Population of the Study … … … … … 54

3.5 Validity and Reliability of Measuring Instruments 55

3.6 Data Analysis Technique … … … … … 55

References … … … … … … … … 58

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Introduction … … … … … … … … 59

4.2 Data Presentation … … … … … … 60

4.3 Test of Hypothesis … … … … … … 62

References … … … … … … … … 74

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION

AND RECOMMENDATION

5.1 Summary of Findings … … … … … … 75

5.2 Conclusion … … … … … … … 77

5.3 Recommendation … … … … … … 79

Bibliography … … … … … … … … 81