THE ROLE OF BANK IN THE DEVELOPMENT OF SME IN NIGERIA
A CASE STUDY OF LAGOS STATE
ABSTRACT
 The economy of any nation is usually boosted (or otherwise down troubled though the influence and impact (positive and negative) of small and medium industries. This is usually the grade industries that are seen every where in our urban and rural areas and which cater for the immediate needs of the populace of any given nation.  Small and medium industries are seen to suffer untold hardship owing to the regulatory polices of government. Most government policies and other external environmental variable usually affect the small and medium industries and further hamper the economic growth and development. But sometimes too, there could be some favourable policies which could help to improve the status of the small and medium industries.  This research work therefore examines the role of banks in developing small and medium enterprise within Lagos State. Banks are privately owned banks established for the purpose of making profit for their owners.  Banks performs certain duties to the small and medium enterprises to enable them carry their business effectively. Some of their duties are accepting deposit, granting loan and overdraft facilities, agency services standing order, investment advice etc. SMEowners are faced with many problems which hinders their growth, some of which are poor record keeping, insufficient fund, poor location, government policies lack of business knowledge, poor quality goods and services etc. Literature review and some references were made to relate the role of banks in developing SMEin the chapter two of the work. Finally the researcher after everything summarized the findings from the data gotten and resolved into making reasonable recommendations before concluding at last.
 TABLE OF CONTENTS
Chapter One
1.0    Introduction
1.1    Background of the Study                             
1.2    Statement of the Problems
1.3    Objective of the study         
1.4    Significance of the study              
1.5    Scope and Limitation of the Study
1.6    Definition of Terms             
 Chapter Two
Review of Related Literature                
2.1    Definition of SME
2.2    Types of Small and medium Enterprises and Business
2.3    Features of SME
2.4    The Role of Banks to the SME       
2.5    How Banks develop SME
2.6    Problems of SME
2.7    Reasons why Open SME
2.8    The Role of SME in Nigeria   
2.9    Advantages of Small and medium Enterprises
2.10  Disadvantages of SME
Chapter Three
Research Design and Methodology
3.1    Research Design         
3.2    Location of Data
3.3    Sources of Data
3.4    Sampling Techniques  
Chapter Four
Data Presentation and Analysis
4.1    Presentation of Data   
Chapter Five
Summary of Findings, Conclusions and Recommendations
5.1    Summary of Findings  
5.2    Conclusions               
5.3    Recommendations              
Bibliography
 CHAPTER ONE
INTRODUCTION
1.1    BACKGROUND OF THE STUDY
According to Orji (2008) banking dates back to the early colonial period. The decline in barter system of trades and the rise in financial transactions of the colonial government require an institution in the form of a  bank for safety and transmission of funds. It was for this purpose that African banking corporation based on so Africa was invited in 1892 to open a branch office in Lagos. The African banking corporation was therefore the first modern commercial bank to open a branch office in Lagos but its existence was made precarious by the trade depression which hit Lagos in that year.
In the year 1894 its operations was taken over by the bank of British west Africa. In 1899, the bank of Nigeria was established by the royal Niger Company. In the year 1912, the bank of British West Africa absorbed the bank of Nigeria and exercised monopoly over banking in Nigeria.
In the year 1925, the Barclays bank started operations in Nigeria and commercial banks joined in the later years.
The indigenization exercise abolished the existence of the expatriate banks in Nigeria. Their existence was terminated for the following reasons.
These banks relied on the dictates of the home office since each individual bank is not normally required to maintain a fixed ration between its liabilities and different classes of assets.
The integration of the banks with parent banks also means automatic dependence on the developed monetary and security markets for liquid assets and investment of excess reserve and effect retardation of the emergence of local money and capital markets.
The bank by virtue of their inter locking relationship with important transnational banks are assured of credit accommodation.
The operations of the banks failed to take into consideration the credit needs of Nigeria.
The discrimination suffered by Nigerians in secreting credit from these banks spurred them to attempt to found their own banks. In the year 1973, the banking industry was indigenized by the federal government acquiring 40% of the equity of foreign banks in Nigeria. This indigenization of banking brought to an end the existence of expatriate banks in Nigeria.
        Banks are privately owned for the purpose of making profit for their owners. They engage in financial intermediation whereby money is mobilized from the surplus units (those who have surplus fund) and channeled to deficit units (those who want to invest in productive activities).
        The government of this country are encouraging people to establish their own small enterprise to reduce the problem of unemployment in the country and also reduce the rate of importation of goods some so, to produce exportable products over the years. There has been an unresolved issue of a proper definition of small and medium industries. This lack of an encompassing definition of SME emanated from the criteria employed to characterize small size organization. However, the main criteria used to classify small business ventures include initial capital outlay, ownership structure, management style, profit level, market share, number of employees, total asset size, type of market share, type of industry, relative position of the firm within its industry or a combination of two or more of the above criteria.
        In most cases, the varied definition appear to be governed by the interest of the perceived, the purpose of the definition and the stage of development in which the definition is employed. Generally a small business is defined as one which is owned, managed by one or two persons, influenced by the family in decision making has no in differential organizational structure market share is small and employ less than fifty (50) persons.                             
        In the third National  development plan, manufacturing establishments employing less that ten (10) people or whose investments on machinery and equipment does not exceed six hundred thousand naira (N600,000) are regarded as small size firm. In the same way the national economic reconstruction fund (NERFUND) defined small and medium industries as those whose fixed assets value do not exceed ten million naira (N10,000,000) while the central bank of Nigeria on the other hand regard any enterprise whose annual turnover is less than five hundred thousand naira (N500,000) as small and medium business. The center for management development gave the definition of small and medium industry in the policy proposal submitted to the federal government in June 1982 as follows:       
“An SME is a manufacturing, processing or service industry involved in a factory or production type of operations employing up to fifty (50) full time workers. Investment in plant and machinery but excluding land and building shall not exceed five hundred thousand naira (N500,000) Power pnat and machinery are utilized in its operations (Ani and Nwandu 2007).
        There are still more definitions of SME as still more definitions of SME as there are authors. It could be inferred from the above definition that emphasis by all the authors center on what we have said earlier identifying the number of employees of the firm, sales volume capital outlay ownership structure etc.
        Banks performs certain duties to SME to enable them carryout their business effectively some of their duties are:
Accepting deposit
Granting of loan and overdraft facilities
Providing station reports
Agency services
Standing order
Provides investment advice etc.
Through these role performed by the banks, small and medium enterprises are enabled to plan their business properly, keep adequate records, maintain properly, keep adequate records maintain proper accountability pursue planned expansion, utility professional assistance, improve their knowledge through apprenticeship programmes and formal education.
1.2    STATEMENT OF THE PROBLEM
        This research has a lot of problems to address this include:
Determining the problems faced by small and medium enterprise.
The problem of determining the role performed by the banks towards the development of small and medium enterprise.
Determining the features of SME and types of business ownership.
To determine the reasons why people open small and medium business.
The problem of determining the contributions made by small and medium enterprises towards the growth of Nigeria economy.
1.3    OBJECTIVE OF THE STUDY        
Every research work must have objective in the case of this research, the objectives are:
To extensively explain the functional role of banks to the small and medium business.
To find out the problems facing SME operations in Lagos state.
To know the various types of business ownership.
To find out some reasons why people go into business ownership.
To identify the various feature of small and medium enterprise.
To ascertain the role of small and medium enterprises in the Nigerian economy.
1.4    SIGNIFICANCE OF THE STUDY     
        This research work is to be used for the purpose of learning. It will broaden the mind of other researchers on the issues involved in SME and its impact on the growth and development in Nigeria.
        It will also form a basis for future work by some students who may be so much interested in small and medium    business. This study is a dynamic one for this reason, it cannot be said to have been completely treated in one work like this.
1.6    DEFINITION OF TERMS   
Commercial Bank: it is privately owned bank it is
established for the purpose of making profit for their owners. They are establishments that issue financial obligations (such as demand deposits) in order to acquire funds from the public. They pool these funds and provide them in larger amounts to business, government and individuals for investment. It can also be viewed as institutions which serve the purpose of channeling funds from lenders to borrowers in the form of short-term funds, medium term funds and long term funds from lenders. In other words, it is an institution involved in financial inter-mediation where money is mobilized from the surplus units (those who have surplus funds) and channeled to deficit units (those who want to invest in productive activities).
Loan: it is classified as problems credit when they cannot
be repaid. It is a facility granted by a bank which intended to be applied for financing a specific purpose. Virtually every business has a credit relationship with a financial institution especially banks. Some rely on periodic short term loans to finance temporary working capital needs. Others primarily use long term loans to finance capital expenditure, new acquisitions or permanent increase in capital. Regardless of the type of loan all credit request mandate as systematic analysis of the borrowers ability to repay.
The basic objective of credit analysis is to assess the risk involved  in extending loans to bank customers.
Fund: it can be classified as increase in the liability or
equity account of a decrease in the asset account. The layman’s view as it related to individuals, business organizations or even pubic authorities represents the sum of money or possession by individual organizations and government for the purpose of making payment and receipts for goods and services provided to the society.
Finance: it is the possession of funds when it is needed
for investment. The academics see finance as the discipline that studies the science of fund management, which includes the institutions that are involved in sourcing funds such as the money market institutions, insurance market institutions and mortgage market institutions etc. based on the foregoing explanations finance can rightly be defined as the science which studies the exploration, exploration and investment of funds as well as sharing of proceeds.
Credit: it is a special form of account payable and it is the
most popular source of short term credit in small and medium scale business in developed and developed economics. It involves the purchase of goods and services and suspending payment to an agreed future date.
Roles: according to oxford dictionary it is the function of a
thing.
Small and medium Business: it is a business that engage in the  production of goods and services to the society, owned managed and controlled by the proprietor has a relatively small market share and capable of employing two (2) to fifty (50) employees.