The critical causes on why financing small and medium scale industries by commercial banks in Nigeria have not been very effective were evaluated. Not only are the SMEs starved with financial back-up, they are also faced with other external problems such as high interest rates, inconsistency in government industrial policies, lack of infrastructural facilities and internally; poor management practices, high rate of business failure, poor accounting standards, shortage of skilled manpower and financial indiscipline. In view of these numerous problems, this research work was conducted so as to come out with solutions as this will pave way for banks to have more confidence in financing these SMEs efficiently and effectively as against hitherto , their stringent lending policies and the risk averse behavior of funding. This has become necessary as it is a well known fact that the survival, growth and development of SMEs of any country depend largely on funding with other factors put in place. In the light of the findings in this research work, some recommendations and suggestions were made to the government, commercial banks and the small and medium scale entrepreneurs themselves which if implemented will not only sustain the survival, growth and development of this sector, it will also provide employment opportunities and improve the economic situation of Nigeria.
TABLE OF CONTENT
CHAPTER ONE: INTRODUCTION
1.1 GENERAL OVERVIEW
1.2 STATEMENT OF THE RESEARCH PROBLEM
1.3 OBJECTIVE OF THE STUDY
1.4 FORMULATION OF HYPOTHESIS
1.5 JUSTIFICATION OF THE STUDY
1.6 RESEARCH METHODOLOGY
1.7 SCOPE OF THE STUDY
1.8 LIMITATION OF THE STUDY
2.1 HISTORICAL BACKGROUND AND DEVELOPMENT
IN COMMERCIAL BANKS
2.5.1 EXTERNAL SOURCES
CHAPTER THREE: RESEARCH METHODOLOGY
3.2 DATA COLLECTION TECHNIQUES
4.5 TEST OF HYPOTHESIS
However, the seminal role played by SMEs not with standing its development is everywhere constrained by inadequate funding and poor management. The unfavourable macro economic environment has also been identified as one of the major constraints which most times encourage financial institutions which most times encourage financial institutions to be risk-averse in funding small and medium scale businesses.
The manufacturing sector (Including Micro, Small and Medium Enterprises) is acknowledged to have huge potential for employment generation and wealth creation in any economy, yet in Nigeria, the sector has stagnated and remains relatively small in terms of its contribution to GDP or to gainful employment. Activity mix in the sector is also quite limited dominated by import dependent processes and factors. Although there is no reliable data, imprecise indicators show that capacity utilization in the sector has improved perceptibly in the period since 1999, but the sector is still faced with a number of constraints
with lack of credit availability as the principal constraint. Credit is the largest element of risk in the books of most banks and failures in the management of credit risk, by weakening individual banks and in some cases, the banking system as a whole, have contributed to many episodes of financial instability. A greater understanding of the nature of credit risk, leading to improved measurement and international financial system vis-a-vis the small and medium enterprises in the long run.
This study attempts to find out how Commercial Banks finance small and medium scale Enterprises taking Union Bank of Nigeria Plc as a case study.
One of the main obligations of commercial Banks in Nigeria and else where in the maximum contribution to the economic development of the nation. Others are maximum profitability owned to the shareholders and maximum liquidity owned to the depositors.
This research work will concentrate on the maximum contribution to the economic development of the nation, i.e. through financing SMEs by commercial Banks. The analysis of the research problem will thus pose some questions like.
iii. To improve the financial assistance to the entrepreneurs by
Commercial Banks will be able to make some adjustments in their
1.7 SCOPE OF THE STUDY
However, UBN, Plc is chosen because of its financial backing and thus represent Commercial Banks that can fulfill their obligations as seen in the earlier part of this chapter.