ABSTRACT

Statistics has revealed that most banks distresses and failures are caused by the formulation and implementation of ineffective credit policies in banks, Therefore, the need to have an effective and efficient credit policy in banks prompted this research study on the "impact of effective credit policy on the overall bank lending (1991 - 2000). In addition, the following problems also prompted this study: • Over dependence of commercial banks on the revenue accruing from the loan they give to customers. • Maintaining an optimum balance between the lending rate ® and the deposit rate (r). • The need to effectively appraise tlie policy guidelines of banks. • Low profitability in banks as a result of unrecoverable loans. Therefore the objective of the study is as follows: • To cnsi.ire proper formulation and implementation of II an effective credit policy on bank lending. • To emphasize the need for proper training of credit officers thus ensuring strict adherence to credit policy of banks. • To ensure the establishment of enabling policies and procedures that will ensure credit policy review arid recovery of loan. More so, some related works were also reviewed in this research study. Specifically, the works of Onyendi, Anuolam, Ojo, Lawal and others were review in the study. Therefore the researcher ma:le use of various research tools thus: questionnaire were well constructed, sent to various respondents and the best completed ones were returned. The questions collected were subsequently analysed using tables and percentages. Furthermore, chi-square was ued in testing the hypothesis formulated in the study with total population of twenty one (21) and through the appiioticn of Yaro Tarnani techniques, a sample size of approximately twenty (20) respondents were selected. In line with the above, the findings of the study is as follows: S xiv • That ineffective credit policy negatively affects the overall bank performances. • That strict compliances with effective credit policy discourages loan defaults. • 'f'hat ineffective credit policy leads to bank failures. In view before going, the following recommendations were also made in the study: • That banks should use the services of financial experts in the formulation • That credit officers employed in banks must be exposed to training and retaining. • Banks must terminate the appointment of any credit officer found to be corrupt. • There should be an efficient and effective internal control system to serve as check to the unexpected misconduct inherent in the banking sector. • There must be efficient means of ensuring maximum loan recovery in banks. • Banks should consider government policies before for iriulating credit policies.