LOAN SYNDICATION: IMPACT ON THE NIGERIA ECONOMY
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The study was focused on the study of loan syndication in the Nigeria financial market and its impact on the economy. The study examines the extent to which loan syndication has contributed to the performance of the Nigeria enterprise. Data was collected through the administration of the questionnaire numbering eighty (80) of which sixty-seven (67) were answered and returned. The response form the return questionnaire form the data for the research work.. This data were analyze on the bases of simple percentages while the Chi – square were employed in the test of the hypothesis
The study reveals that loan syndication has improved the performance of the Nigeria enterprise. It has not been significantly being applied in the basis of the finding made. It was recommended that participating bank in loan syndication business should endeavor to set up distinct department or section with good management structure capable of dealing with the cooperate borrowers seeking for syndication loans and that banks should be involved in a lot of innovation programme that will increase their deposit base in order to comprehensively eliminate the fear of a possible liquidating that may arise from making syndication loan which one major reason for which should shy away from providing adequate syndication facilities to industrialist.
BACKGROUND OF THE STUDY
The origin of the syndication loan was traced to the bankers of the middle age who distributing their financial risk among several house to support the trade flow. This system was more on a participating basis, then a formalize syndication as the lender did not adopt one common loan documentation.
In Nigeria loan syndication can be trace to the 60’s. When a consortium of the commercial bank and the acceptance house discounted trade bills for the marketing board under the produce bill financial scheme, formalize loan syndication came into been during the oil boom of 70’s where there was need for adequate capital to finance the industrialization programme.
During the programme, few of the merchant banks have been incorporated.
Loan syndication has assumed international dimension because of he need to provide the capital to finance the fast growing world economy.
An international syndication credit is managed and was under written by one more financial institution normally from access t more than its currencies of domicile
STATEMENT OF THE PROBLEMS
The management of loan syndication in the Nigeria financial market has always been the a problem to the enterprise and that is why I am conducting a research on the topic looking bank as the origin of the syndicate loan which traced back on the bankers of the middle age who distributed their financial risk amongst several house to support the trade flow. This system was more on participating basis than on formalize syndication, as lenders did not adopt one common loan documentation.
The problem mogul comes from the delay in packaging and putting the credit in place before disbursement to the borrowers. Some of the bank is invited by the lead bank to participate in syndication by decline and come up with reasons like loan growth constraint, liquidity problem etc. some syndicated loan takes up to two yeas to conclude. After the loan has been disbursed, another problem can arise in cooperate attitude of the borrowers in meeting and condition stated in the loan agreement such as submission of progress report quarterly management account. The payment of the interest and principle when due occasionally pose some problems. The borrowers may be facing a liquidity problem, low sale and income earn, diversion of working capital into acquisition of fixed asset etc, such problem is not properly handled may lead to rescheduling and restructurings and refinancing the loan.
OBJECTIVE OF THE STUDY
a. To ascertain the adequacy of the syndicated loan provided by the bank to the industrialist.
b. To assertion the effect of long term syndicated loan on the liquidity position of the bank in Nigeria.
c. To ascertain the extent to which management structure has affected loan syndication business in Nigeria.
d. To determine the increase of disagreement between the lead bank and the participating bank in loan syndication business
e. To identify the problem encountered in the documentation process of syndicating loan.