CHAPTER ONE

INTRODUCTION

1.1 Background to the Study

The banking industry has been known for its role in providing financial assistance
(credit) needed in the economy. This role is normally carried out in many ways, for
example, granting of loans and advances to customers, which constitute the major
part of bank lending. Apart from loans and advances, there are other forms of
banking or bank credits or bonds issued by banks for and on behalf of customers.
Banks are merely custodians of the money they lend; hence interest must be paid to
depositors and dividends to the investors. Credit management can be seen as an
integral part of lending and as such in its absence, good loans can turn bad.
Many financial institutions are continually being faced with difficulties dealing
with bad debts spanning over several years thereby posing a danger to their profit
margins, working capital and sustainability; and causing consternation in the
financial sector. The most affected groups among financial institutions that are
often hit by bad debts are the savings and loans institutions. This is because these
institutions usually grant unsecured loans to their clients.
Bad debt means money owed by persons or institutions which are unlikely to be
recovered. Financial theory attributes none recovery of loans in financial contracts
to widespread informational asymmetry between borrowers and lenders in
financial markets regard with their credit worthiness. Financial institutions are
claimed to have the ability to deal with such informational asymmetry and the
resulting moral hazards and adverse selection in financial contracts. However,
close examination of financial statements of many financial institutions reveal
horrifying pictures of high bad debts.

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The causes of bad debt are many and varied and not usually due to irresponsibility
on the part of the borrower as is commonly assumed. Economic shocks such as
high inflation, exchange rate volatility and upward movements in interest rates as
well as lending strategies of financial institutions contribute to the occurrence of
bad debts. The literature also attributes job loss, ill health and unexpected changes
in factor prices among other things to the causes of bad debts in organizations.
Nevertheless, mismanagement or misappropriation of borrowed funds can also
results in bad debt. Unfavourable weather conditions can also cause huge losses to
farmers and hence the credit to the agricultural sector will suffer repayment
problem. Dishonesty on the part of officials of lending institutions can result in
huge bad debt bills for financial institutions. There are instances where loan
officers or managers give unsecured loans to clients because of their personal
relationship with the clients. The relationship could range from friendship to
family or church member. Since such loan may be unsecured, repayment may be
much doubtfùl.
Owolabi and Obida (2012) recommended that management should control credit to
ensure adequate liquidity by developing appropriate credit model that would
provide a collection of receivables at the due date. The strategy includes credit
terms and customers’ risk assessment, credit collection, and enhanced debt
recovery at low cost. Ifurueze (2013) noted that adequate liquidity has a significant
moderating influence on the profitability of an organization. This assertion has led
to a question of how does credit management strategies influence the level of
liquidity and consequential profit? The answer to this research question has been
omitted in the quoted chemical and paint manufacturing subsector in Nigeria.
Therefore, further research is needed to assess the impact of credit management
strategies on the firms’ liquidity and profitability. The general objective of this

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study is to investigate the effect of credit management strategies on the liquidity
and profitability of quoted chemical and paint manufacturing firms in Nigeria.
The effects of debts can be devastating to people, their families and sustainability

of lending institutions. Most companies in preparing their annual budgets make

provisions for bad debts. Companies make an estimate of bad debt that may be

incurred within the current time period. This estimate is usually based on past

records and used in the process to estimate the overall earnings. A banks profit

primarily, is earned from the interest on loans, credit cards and bank charges from

their customers. If a customer falls into debt with a bank, the interest paid on the

amount owed and charges earn the bank some money, therefore, from the

foregoing example, it seems to be in the bank’s interest to have customers whose

debts eventually end up bad.

Among other things, this study would attempt to unveil the management of bad

debts in banking industry in Nigeria with special reference to union bank, Lokoja.

1.2 Statement of the Problem

The provision for bad and doubtful debts rises steadily in banks annual reports

which send bad signals to the investors within the economy. The cases of failed

banks in the economy over the years have made the investors lose confidence in

the banks. The industries usually make short term planning as opposed to long

term planning which tends to hamper their forecast and projection into the future

activities and earnings. Bad debts are by far the most common cause of bank

3
failure. In recent years, financial institutions have suffered very large losses due to

non-repayment of loans.

This problem of debt management posed serious threat to the whole financial

sector of the country. Bad debt is a problem that financial institutions try to avoid.

From the lay man’s point of view, the easiest way to reduce bad debt is to reduce

the amount of loans granted. This then presents a paradox. The main function of

financial institutions is to work between surplus as an intermediary between

surplus units and deficit units. The institutions take deposits from surplus units

(savers) and lent to deficit units (borrowers). Reducing the loans given out would

directly affect their profit levels and threaten their sustainability. The task facing

the management of financial institutions is how to balance their quest to increase

profit in order to continue operations and how to reduce the incidence of bad debt.

Thus this study would provide a coherent insight into the debt management of
financial institutions in Nigeria with special reference to union Bank, Lokoja.
1.3 Objectives of the Study
The main objective of this research work is the assessment of the effect of debt

management on the profitability of banks in Nigeria as Applicable to Union Bank

Lokoja. The specific objectives include;

i. To examine the relevance of debt management to the success of banks in

Nigeria

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 ii. To ascertain the effectiveness of bad debt management instrument in

banks in Nigeria

iii. To assess if the management of bad debt has helped to reduce business

failure

1.4 Research Questions

This research work tends to ask the following questions

i. what is the relevance of debt management in in the success of banking

industry in Nigeria

ii. how effective is the debt management instruments in financial

institutions in Nigeria

iii. What is the impact of debt management on the profitability of banks in

Nigeria.

1.5 Statement of Hypotheses

This research work test the following hypotheses;

Hypothesis One

Ho: Debt management is not relevant to the success of banks in Nigeria

Hi: Debt management is relevant to the success of banks in Nigeria

Hypothesis Two

Ho: Debt management instrument is not effective in banks in Nigeria

Hi: Debt management instrument is effective in banks in Nigeria

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 Hypothesis Three

Ho: Debt management has not helped to reduce business failure.

Hi: Debt management has helped to reduce business failure.

1.6 Significance of the Study

Banks and financial institutions that offer credit facilities to individuals and

business firms are grappling with the ways of minimizing the incidence of bad

debts. Management of financial institutions has been trying by all means to reduce

bad debts in their institutions. The relevance of this study stems from the fact that

it seeks to bring to the fore the major causes of bad debts; which would benefit the

management of financial institutions. The recommendations that would be made at

the end of the study would be of immense importance to financial institutions

especially union bank in their bid to manage the incidence of bad debts.

The study would provide the opportunity for academic communities at large to

know the framework of debt management for them to finance the economic

activities of low income group and poor. The research is also an eye opener to the

researcher as future expert to know the impact of debt management for the purpose

of effective and efficient operation.

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1.7 Scope of the Study

This study covers the effect of bad debt management on profitability in the bank

industry in Nigeria with special reference to union bank, Lokoja.

1.8 Limitations of the Study

The following limitations were encountered in the process of carrying out this

research work:

i. Time factor: The semester is in a way with the academic activities is time

demanding and both project were time demanding. So, the available time had to be

divided between them which often more than not is not enough.

ii. Financial Difficulty: Money serves as the life wire of every project work. More

areas would have been covered were it not for financial constraint.

iii. Lack of cooperation from the respondents: Some of the respondents were

scared that their response could be used against them. So, they were not so willing

to give appropriate answers.

1.9 Definitions of Terms

Bad Debt: Bad debt, by simple definition, means a debt that has no prospect of

recovery, while doubtful debt refers to a debt with only a very remote prospect of

recovery. A general problem confronting all banks operating in Nigeria today is the

issue of bad and doubtful debts. Indeed, banks in most countries of the world today

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have peculiar problem, emanating from the increasing level of bad and doubtful

debts.

Credit: granting the use of possession of goods without immediate payment.

Debt Management: Debt management involves arrangement put in place for

repayment of the credit facilities. Debt management can be seen as those policies

which seek to alter the stock composition and the terms on which debt is created

with a view to maintain at any given time.

Debt: Debt is an amount of money borrowed by one party from another. Many

corporations/individuals use debt as a method for making large purchases that they

could not afford under normal circumstances. A debt arrangement gives the

borrowing party permission to borrow money under the condition that it is to be

paid back at a later date, usually with interest. A debt which matures within one

year is defined as floating debt. That which matures between one to five years is

often regarded as short-term debt. A debt, which due for repayment between five

and ten years usually qualifies as medium term while that is mature after ten years

is a longtime one.

Internal control: system of controlling actual performance against standards

through the use of presented mechanizes.

Lending: act of granting money out on credit

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 CHAPTER TWO
LITERATURE REVIEW
2.1 Conceptual Framework
2.1.1 Concept Bad Debt
Bad debt, by simple definition, means a debt that has no prospect of recovery,
while doubtful debt refers to a debt with only a very remote prospect of recovery
(Ojo, 2004). A general problem confronting all banks operating in Nigeria today is
the issue of bad and doubtful debts. Indeed, banks in most countries of the world
today have peculiar problem, emanating from the increasing level of bad and
doubtful debts.
Bad debt means money owed by persons or institutions which are unlikely to be
recovered. Bad debts are said to be dependent more on the industry performance
than other sectors of the economy. It is posited that public sector banks have
demonstrated significant performance in containing bad debts. Private Banks are
noted to have continued to being stable in containing bad debts due to the fact that
they have better risk management procedures and technology. It is revealed that a
considerable amount of academic literature has dwelt on determinants of banking
crisis as a consequence of bad loans in the banking system.
Research findings and publications show that bad loans occur as a result of some

factors. Berger and De Young (2007) identified poor management as one of the

major causes of problem loans. They argue that managers in most banks with

problem loans do not practice adequate loan underwriting, monitoring and control.

A World Bank policy research working paper on Nonperforming Loans in Sub-

Saharan Africa revealed that bad loans are caused by adverse economic shocks

coupled with high cost of capital and low interest margins (Fofack, 2005).

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Goldstein and Turner (2006) states that the accumulation of non-performing loans

is generally attributable to a number of factors, including economic downturns and

macroeconomic volatility, terms of trade deterioration, high interest rate, excessive

reliance on overly high-priced inter-bank borrowings, insider lending and moral.

2.1.2 Concept of Debt Management

Debt management involves arrangement put in place for repayment of these credit

facilities (Uremadu, 2004). According to ESCAP, (2006) Debt management

encompasses more than the mere mobilization of domestic and external resources,

recording this debt and making timely debt service payment. In the same vain it

also fulfils a wider role in safe guiding the stability of the individual bank and thus

the banking system as a whole.

Debt management can be seen as those policies which seek to alter the stock

composition and the terms on which debt is created with a view to maintain at any

given time. A debt which matures within one year is defined as floating debt. That

which matures between one to five years is often regarded as short-term debt. A

debt, which due for repayment between five and ten years usually qualifies as

medium term while that is mature after ten years is a longtime one. (Babade,

2003).

Thus the management of national debt has implication for the money supply level

and structure of interest rate in the economy money supply and interest rate are

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variable of monetary policy. Debt management is necessary when existing debt

measure and is refinanced when these is a positive government borrowing

requirement which adds to the size of the total national debt. (Oguntade, 2006).

2.2 Theoretical Framework

Asset Liability Management (ALM) Framework

The ALM application for a financial institution has been in use for a few decades

and has subsequently been adopted by other private sector agents (Barro, 1979). Its

main proposal is that risk can be contained by matching the financial features (e.g.

interest rate characteristics) of the assets and liabilities, as then one side of the

balance sheet will be hedged –or immunized- by the other side. A simplified view

of the ALM application can be drawn from the risk management practice of a bank

(Nars, 1997). As a financial intermediary, a bank takes deposits from the public

and makes loans to individuals and businesses at interest rates that usually exceed

the cost of raising such funds.

Theory of Debt Maturity

This theory states that maturing risky short-term debts can impose a stronger debt

overhang effect than long-term debt do, thus altering a firm’s investment decisions

according to Diamond, et al [2011]. The theory is said to aid in understanding

implications of debt maturity structure, excessive defaults and underinvestment

during recession, among others. The theory further postulates that if assets display

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higher volatility due to interim bad news, then equity holders with short-term debt

are bound to be knocked out and lose more of the investment benefits that come in

the future. The theory predicts that, granted everything else is equal, firms with

higher degree of countercyclical volatilities will employ long-term debt if they

object to maximize their incentive to invest.

Johnson (2003), argued that, maturity and leverage are jointly endogenously

determined. He established a positive relationship between maturity and growth

opportunities. In tandem, it was asserted by Diamond, et al [2011] that early

default for growth firms might be more costly which pushes optimal maturity

structure towards long-term. It was further noted that, default receivables (debts)

recording and verification have gained a great deal of attention. In tandem, banks

are called upon to be more efficient in accounting due to the fact that it would

enable them to develop the risk of default. Consequently, banks’ management can

determine the overall strength of the banking system and its ability to handle

adverse debt default conditions.

It is, moreover, stated that, the best method of analyzing and recording bad debt
objected at estimating debts that are likely to go bad will depend not only on the
data structure, the characteristics of the data, but more importantly on the ability of
a person handling the task to classify the data, and also on the objectives of the
classification.

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2.3 Empirical Review
Nangila (2013) established the nature of unsecured personal loans offered by
commercial banks and the effects of unsecured personal loans on Household
welfare of secondary teachers in Bungoma County-Kenya. The study found that
the major types of unsecured personal loans borrowed by secondary school
teachers were Home improvement, Education, loans to provide capital, medical
loans and loans to clear other loans.
Nam & Elliot (2013), determined on whether student debt jeopardize the short term
financial health of U.S households. They indicated that households with
outstanding student loan debt and a median 2007 net worth of $128,828 incurred a
loss of about 54 percent of net worth in 2009 compared with households with
similar net worth levels but no student loan debt over the same period. Felix and
Claudine (2008) examined the association between the performance of banks and
credit risk management. As part of their findings, they observed that return on
equity and return on assets both measuring profitability were inversely related to
the ratio of non-performing loan to total loan of financial institutions thereby
leading to a decline in profitability.
Correspondingly, Kithinji (2010) examined the effects of credit risk management
on commercial banks profitability in Kenya. They observed that the level of credit
was high in the early years of the implementation of Basle II but decreased
significantly in 2007 and 2008, probably when the Basle II was implemented by
commercial banks. The findings revealed that the bulk of the profits of commercial
banks are not influenced by the amount of credit and non-performing loans
suggesting that other variables other than credit and non-performing loans impact
on profits. Kargi (2011) examined the impact of credit risk on the profitability of
Nigerian banks. Findings from the study revealed that credit risk management has

13
a significant impact on the profitability of Nigerian banks. Hence, they opined that
banks’ profitability is inversely influenced by the levels of loans and advances,
non-performing loans and deposits thereby exposing them to great risk of
illiquidity and distress. Although, some considerable amount of literature exists on
the interaction between finance and credit management on banks liquidity position,
however, the same is not true in developing economies like Nigeria where there is
a relatively dearth in literature in this area, coupled with the huge institutional
differences between Nigeria and other developed economies. Hence this study
examined the relationship between credit management and bank performance in
Nigeria.
2.3.1 Causes of Bad Debt/Loans
According to Ahmad (2007), some of the main factors that lead to bad debt/loans
are the reluctant in resettlement coupled with diversifying the funds by the
creditors and the deliberates lack of appropriate appraisal of the facility by the
Loan Officers. Kwakwa (2009) have indicated that loans facility granted to
corporate firms tend to result in high loan default rate as real GDP falls, and that
the decline in the local currency against the major foreign bureaux in the exchange
rate, have a direct repercussions on the repayment ability of borrowers. Balogun
and Alimi (1988) have also recognized the following as notable causes of loan
default affecting the banking sector:
1. Shortages of loan
2. delay in time of loan delivery
3. small firm size
4. the prevailing high interest rate in a country
5. poor supervision by most regulators
6. Non- profitability of enterprises and unnecessary government intervention.

14
As noted by Gorter and Bloem (2002), NPLs are generally caused by some factors
that are likely to happen due to erroneous economic decisions undertaken by
individuals and other circumstances such as unfavourable weather conditions and
unexpected price changes for certain products which are sometimes beyond the
realm of the individual. Whenever this happens, loan holders ought to make
allowances for a regular share of default in the form of bad loan provisions, or the
risk could be spread through an insurance policy.
A study conducted by Nishimura et al (2001) in Japan opined that one of the main
factors inhibiting an efficient economic growth in that country was the issue of
NPLs. The study said that some of the loans facility granted to institutions by the
banks during the era of bubble turned out to NPLs when the bubble burst. Most of
the non-payment occurred due to inefficient management practices, loan diversion
and reluctant by debtors in honouring their financial obligation. Kohansal and
Mansoori (2009) added to this by saying that government imposed interest rate
ceilings, high transaction cost on loans, the issue of moral hazard and the
monopolistic power creditors on the markets usually possessed by the informal
lenders as some of the major causes of bade loans.
Olomola (1999), have also said that loan disbursement lag and the issue of high
interest rate are likely to add up to the transaction cost on loan acquisition which
could end up in affecting the repayment schedule. Berger and DeYoung, (1995)
indicated that, the issue of recovery and overdue of loans is one main factor
militating against banks in Nigeria. Even though the reasons cited differs from one
financial institution to the other due to the various nature of loans granted, the
problem however cut across. From the perspective of the industrial sector as the
study indicated, the causes of bad loan are bad selection of the entrepreneur, lack
of feasibility study to determine the viability or otherwise of the project,
insufficient collateral security that is equitable mortgage against the facility

15
granted, unrealistic terms and schedule of repayment, absence of proper
monitoring mechanism and other natural happenings beyond the control of both the
lenders and the borrowers.
Other researchers have given other causes of bad debt and loans as the following:
Grace Period: Several lending practices showed that grace periods have been too
short to serve their intended purposes. Especially this can be left in the start-up
phase of the business. The grace period also affects repayments of loans although it
is intended to protect the lending institution. (Lassort and Clavier, 2009).
Insider Lending: According to Bridge (1998), bad loans accounted for most banks

which were in distress and the major causes of these bad loans were insider

lending, macro-economic instability and lending to high risk borrower. Insider

lending was identified as one main factor of bad loans that led to collapse of local

banks. In Nigeria for instance, insider loans which were all unrecoverable

accounted for 65% of the total loans of the four local banks that were liquated in

1995 (NDIC, 1994, p. 48).

2.3.2 Effects of Bad Loans on the Banking Institutions

Banks derive most of their income from the interest they charge on loans they
disburse which contribute to the profitability of these banks. In view of this, when
such loans end up as not performing, the financial strength of these banks are
affected. As stipulated in the banking regulations, banks undertake enough
provisions and charges for bad loan that is impairment charges and therefore the
impact is undesirably on the financial performance these banks. As indicated in the
Bank of Ghana Act, (2004) on the loan acquisition policy, loans attains non-
performing tag if it is at least ninety days unpaid period, which will make it to

16
invite certain basic rate of 25%, 50% and 100% for substandard, doubtful and loss,
respectively.
To Bloem and Gorter (2001), even though NPLs tend to affect negatively all the

financial institutions, the impact is however felt more by those within the

commercial banks and mortgage financing institutions which usually possess large

chunk of loan facilities. This ultimately hampers the ability of these financial

institutions in granting further loans to respective applicants. Large NPLs could

leads to dwindling confidence level of both depositors and foreign investors who

may adopt strange position against the banks which might result in a negative

signal and liquidity problems. Bad debts policy tends to reduce total loan portfolio

of the financial institutions thus affecting the interest earnings on such assets.

Banks thus experience huge cost of operation through this direction. Bad debt

could result in banking challenges which might eventually leads liquidation of

banks having unprecedented NPLs as confirmed by some of the existing literary

works. Demirgue-Kunt et al (1989) as cited in Berger and De Young(1997)

confirmed by saying that financial institutions undergoing failings might have high

amount of bad debts prior to failure and therefore the quality of asset at its disposal

is a statistically enough predictor of bankruptcy.

2.3.3 Ways Of Minimizing Bad Debts/Loans

To Kohansal and Mansoori (2009) financial institutions ought to institutes more

practical ways to reduce the high incidence of loan defaults. These could be done

17
through issuance of collateral security, adoption of credit rating mechanism, third-

party credit guarantee, and the use of collection agencies. Again as noted by Kay

Associates Limited (2005), these debts could be controlled and reduced through

adoption of policy that ensures loan facility are given to good standing clients who

have the ability to honour their obligation to the end. Application for credit by the

potential applicant should be subjected to vigorous loan analysis so as to determine

credit risk of the borrower in order to reach a firm decision before the facility are

granting.

Furthermore proper monitoring mechanisms should be implemented so that

whenever a client fails to honour the loan obligation, necessary action could then

be taken and if possible renegotiate with the clients on the loans should the need

arises.

Proper management monitoring and control mechanisms: Many management

of the financial institutions do not consider the need to put in place a proper loan

repayment mechanism even though it is one area of possibility in avoiding the

incidence of impairment charges, Rouse (1989) have pinpointed to this as the most

effective way to avoid these menace. These measures which he identified as

frequent visits and interviews and an efficient audited and management accounts

could be adopted as a form of monitoring and control mechanism. Some of the

effective mechanism which could also be adopted to reduce the incidence of bad

18
debts is ensuring that the loan acquired is used for the intended purposes. Other

measures such as identifying indications that might serves as early warning signals

of issues within the operations of the borrower which could affect the payment

schedule, sticking to the terms and condition as stipulated in the loan requirement

and then taking time to diagnose together with the borrower the likely challenges

and prospects of the business.

Security: Demand for security as a prerequisite for granting of loan is very

essential as it has the tendency of serving as a form of cushion for banks in the

event of loan default. Due to the doubtful financial statements which are

sometimes presented to acquire credit, various banks this days insist on security

before granting of loan facility. Every effort must therefore be taken in terms of

legality of every facility by managers of these financial institutions to help reduce

the incidence of bad loan.

Borrowers who could not afford the provision of security mostly do not avail

themselves at all to apply for loan which serves as a way of reducing loan default.

Pre-Lending Information: In order to help safeguard repayment of loan, adequate

checks about the applicants ought to be undertaken before the facility is granted.

This detail information about the applicants could be in the areas of personal and

business affairs so as to determine the repayment ability. Rouse (1989), have

19
identified seven criteria such as character, ability, margin, purpose, amount,

repayment and insurance (CAMPARI) in lending which should be adopted.

2.3.4 Profitability of Banks

Banking Profitability may show managers attitude toward risk. Banks that make

huge profits are not scared when venturing into risky activities. In a similar

fashion, banks that are not effective in their management encounter higher bad

debt. Profitability measure is important to the investors. The level of profitability is

very significant for shareholders of a bank because it shows how effective

management has utilized their investments (Devinaga, 2010). In determining the

financial strength of a deposit money bank, the level of profitability is

predominant. ROA and ROE are used as main profitability measures in most of the

organizations including banks and financial institutions. The ROA demonstrates

the level of net income produced by the bank and also determines how the assets

utilized by banks generate profit over the years. On the other hand, the return on

equity (ROE) is the ratio of net income to total equity indicating returns to

shareholders on the book value of their investment. It measures the rate of return

for ownership interest (shareholders) ‟ equity of common stock owner, it tells how

efficient a firm/bank is at generating profits from each unit of shareholder equity,

also known as net assets or assets minus liabilities. The ranking of banks is usually

based upon the higher ROA ratio and total assets. As a general view, particularly in

20
banking sector, ROA is known as good profitability multiplier for the reason that

equity multiplier does not influence it (Saeed et al., 2016). Profitability can be

measured in a number of ways. They include return on assets (ROA), return on

equity (ROE). Over the year, most researchers prefer using return on asset (ROA)

and Return on Equity (ROE) as indicators of profitability or performance.

Researchers often use both ROA and ROE as measures for profitability. In their

defense, these researchers selected ROA and ROE over others because it is free of

financial leverage and the risks associated with it (Flamini et al., 2009).

Additionally, it is possible to compare companies in the same industry or diverse

industry when ROA and ROE is employed as a proxy for profitability. This makes

ROA and ROE strong measures for profitability (Devinaga, 2010).

Profitability is an indicator of banks capacity to carry risk and/or increase their

capital. It indicates banks competitiveness and measures the quality of

management (Adinde, 2014).

The determinants of commercial banks' profitability can be concluded into two

categories, namely those that are management controllable (internal determinants)

and those are beyond the control of management (external determinants) Guru,

Staunton, and Balashanmugam, 1999). The internal determinants reflect upon

banks' management policy and decision concerning sources and uses of funds

management, capital and liquidity management and expenses management. This

21
kind of profitability factors can be examined by financial statements of commercial

banks (Guru et al., 1999). The external factors are environment factors and firm-

specific ones (Guru et al., 1999). This research mainly focuses on the analysis of

internal determinants because our purpose is to test the effect of credit

management to deposit bank’s profitability. The determinants reflected upon credit

management should be included into internal policy and decisions which can be

examined by financial statements. On the other hand, bank’s decisions are also

affected by external regulation, thus this research also involves the consideration of

external factors.

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 CHAPTER THREE
METHODOLOGY
3.1 Research Design
The research design is the plan of the study. A research design is the set of
methods and procedures used in collecting and analyzing measures of the variables
specified in the research problem. A research design is a framework that has been
created to find answers to research questions. The research design is the plan of the
study. In other words a research method is a sketch of what the researcher is
intended to do, how and what materials is intended to employ to carry out the study
successfully.
There are many ways to classify research designs, but sometimes the distinction is
artificial and other times different designs are combined. Nonetheless, the list
below offers a number of useful distinctions between possible research designs. A
research design is an arrangement of conditions or collections. Research design can
be classified into descriptive (e.g., case-study, naturalistic observation, survey),
correlational (e.g., case-control study, observational study), semi-experimental
(e.g., field experiment, quasi-experiment) and experimental (experiment with
random assignment).
The researcher has adopted a descriptive survey design which implies that the
study is concerned with a systematic description of data related to the effect of bad
debt management on profitability in the bank industry in Nigeria with special
reference to union bank, Lokoja. This design is considered apt because it enables
the researcher to generate data through the standardized collection procedures
based on highly structured research instrument(s) and well defined study concepts
and related variables.

23
3.2 Area of Study
This research work evaluates the effect of bad debt management on profitability in
the bank industry in Nigeria with special reference to union bank, Lokoja. The
union bank branch used for this research work is located in Lokoja, along Ganaja
Junction Road.
3.3 Population of the Study
A research population is also known as a well-defined collection of individuals or
objects known to have similar characteristics. All individuals or objects within a
certain population usually have a common, binding characteristic or trait. Two
Types of Population exist in Research;
Target Population: Target population refers to the entire group of individuals or
objects to which researchers are interested in generalizing the conclusions. The
target population usually has varying characteristics and it is also known as the
theoretical population.
Accessible Population: The accessible population is the population in research to
which the researchers can apply their conclusions. This population is a subset of
the target population and is also known as the study population. It is from the
accessible population that researchers draw their samples.
The population for this research work include the staff of Unionbank of Nigeria
Plc, which has population of 45 people.
3.4 Sample of the Study
In defining a sample size from a population, Edo (1992) advance that it is a process
of selecting proportion of the population considered adequate to represent all
existing characteristics within the target population for the purpose of generating
the finding.

24
Samples of forty (40) people are considered to determine the opinion of the entire
of Unionbank Plc, Lokoja Branch. The researcher make sure that a proper
sampling techniques was used to avoid bias that could render making inference
impossible. Among all the sample technique available for use, the used researcher
the simple random techniques.
3.5 Method of Data Collection
Data collection is the process of gathering and measuring information on targeted
variables in an established system, which then enables one to answer relevant
questions and evaluate outcomes. Data collection is a component of research in all
fields of study including physical and social sciences, humanities and business.
While methods vary by discipline, the emphasis on ensuring accurate and honest
collection remains the same. The goal for all data collection is to capture quality
evidence that allows analysis to lead to the formulation of convincing and credible
answers to the questions that have been posed
Method of data collection is concerned with the tools a researcher employs to
generate information for data analysis. In the course of this study, the researcher
collected data through primary and secondary sources.
i. Primary Sources: This includes oral interview conducted in the branches
of the bank with the aid of questionnaire. The questionnaire contained
answerable and easy questions. Primary data collection methods can be
divided into two groups: quantitative and qualitative. Quantitative data
collection methods are based in mathematical calculations in various
formats. Methods of quantitative data collection and analysis include
questionnaires with closed-ended questions, methods of correlation and
regression, mean, mode and median and others
ii. Secondary Sources: Secondary data used in this research work were
gotten from sources such as text books, journals, public and class lectures

25
 for the purpose of the project work. Secondary data is a type of data that
has already been published in books, newspapers, magazines, journals,
online portals etc. There is an abundance of data available in these
sources about your research area in business studies, almost regardless of
the nature of the research area. Therefore, application of appropriate set
of criteria to select secondary data to be used in the study plays an
important role in terms of increasing the levels of research validity and
reliability. These criteria include, but not limited to date of publication,
credential of the author, reliability of the source, quality of discussions,
depth of analyses, the extent of contribution of the text to the
development of the research area etc
3.6 Administration and Retrieval of Instrument
The researcher distributed forty (40) copies of the questionnaire to the selected
respondents through face to face method. By this method the researcher visited the
location of sample group and distributed the questionnaire to the chosen number of
respondents by hand rather than sending them through mails. This method ensured
that copies of the questionnaire were not lost during the course of transit. The
researcher after agreeing with the respondents on when to retrieve the completed
questionnaire went back after three days. This is to promote objective which is the
essence of the study. The questionnaire was also written in a simple language easy
to understand and void of ambiguous words. 36 questionnaire were retrieved from
the respondents.
3.7 Problems of Methodology
In administration of questionnaire for data collection, some problems were
encountered such as financial inadequacy. Money was needed for movement since
most of the respondents could not fill the questionnaire on the agreed date. This
made the researcher to keep checking until the retrieval was possible.

26
Some respondents did not give adequate information needed for analysis. This
therefore, rendered such questionnaire invalid. Despite the assurance given that
any information that will be given is only for research purpose and will not be used
for another anything, some respondents did not supply the information needed.
Again, not all questionnaire distributed were returned as requested by the
researcher. As a result of this, the analysis was done based on the returned
questionnaires.
3.8 Method of Data Analysis
This deals with the presentation, analysis and interpretation of the data collected.
From the data, tables shall be drawn on the subject matter that is, the effect of bad
debt management on profitability in the bank industry in Nigeria with special
reference to union bank, Lokoja. The data collected were presented using
percentage (%) and the hypotheses were tested with the use of chi-square (X2).
The chi-square formula used in testing the hypotheses is

X2 = ∑ (fo-fe)2
fe
Where
Fo = the observed frequency
Fe = the expected frequency
∑ = Summation
X2 = Chi-Square

27
 CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

4.1 Presentation and Analysis of Data

This chapter deals with analysis and presentation of data collected. Forty
(40) questionnaires were administrated to the respondents and thirty six (36)
questionnaires were returned. All the thirty six questionnaires returned were rightly
completed. The completed questionnaire was processed and data were presenting
and subsequently analyzed.

Table 4.1.1: Sex Distribution of Respondents

Respondents Frequency Percentage %
Male 21 56.8
Female 15 41.7
TOTAL 36 100
Source: Field Survey 2018

The above table reveals that out of 36 respondents 21 were male which
represents 56.8% while 15 were female which represent 41.7% of the sample. This
result implies that male respondents are higher than the female respondents.

Age Frequency Percentage %

Under 25 years 5 13.9
26-35 years 24 66.7
36-45years 5 13.9
46-years and above 2 5.6
Total 36 100
Table 4.1.2: Age Distribution of Respondents

Source: Field Survey 2018

28
 The table above reveals that 5 respondents representing 13.9% are under 25
years, 24 respondents representing 66.7% are between 26-35 years of age, 5
respondents representing 13.9% are between 36-45 years of age, 2 respondents
representing 5.6% are above 46 years of age. This is an indication that majority of
the people working in Access bank are youth under the age of 26-35. This leads to
higher productivity.

Table 4.1.3: Marital Status of the Respondent.

Response Frequency Percentage%
Married 16 43.2
Single 19 52.8
Divorced 1 2.8
Total 36 100
Source: Field survey 2018

From the table above out of 27 respondents using their marital status 16
respondents which represent 43.2% are married, 19 respondents which represent
52.8% are single and 1 respondent which represent 2.8% are divorced.

Table 4.1.4: Educational Qualification.

Qualification Numbers Percentage
SSCE / GCE / NECO 3 8.3
OND / NCE 12 33.3
HND / BSC 17 47.2
MBA / MSC / MPA 4 11.1
Total 36 100
Source: Field Survey 2018

These analysis above shows that 3 respondents representing 8.1% are SSCE
holders, 33.3% of respondents are ND /NCE, HND/BSC Holders are 47.2% while
other qualification constitute 11.1%.

29
Table 4.1.5: Distribution According to Management Level.
Management level Numbers Percentage%
Top management 10 27.8
Middle management 11 30.6
Lower management 15 41.7
Total 36 100
Source: Field Survey 2018.

These analyses above show that 27.8% or 10 of the respondents are top
management and 30.6% constitute the middle management while 41.7% represent
the lower management level. This implies that major respondents in this work are
under lower management level.

Table 4.1.6: How Long Have You been working?

Response Frequency Percentage%
0-5 years 7 19.4
6-10 years 9 25
11-15 years 14 38.9
16-20 years 4 11.1
21 years and above 2 5.6
Total 36 100
Source: Field Survey, 2018.

In the above table 19.4% of the respondents work within 0-5 years, 25%
represent the respondents who work between 6-10 years, 38.9% represent the
respondents who work between 11-15years, 11.1% work between 16-20years
while 5.6% have worked over 20years in the institution.

Table 4.1.7: Distribution According to Department

Department Frequency Percentage%
Administrative Dept. 14 38.9
Customer Care Dept. 8 22.2
Teller Dept. 14 38.9
Total 36 100
Source: Field Survey, 2018

30
 The table above reveals that 14 respondents representing 38.9% work in
administrative department, 8 respondents representing 22.2% customer care
department while 14 respondents representing 38.9% work as teller.

Section B.
Table 4.2.1: Debt management is relevant to the success of banks in Nigeria
Response Frequency Percentage%
Agree 29 80.6
Disagree 4 11.1
Undecided 3 8.3
Total 36 100
Source: Field Survey 2018

The table above reveals that 29 respondents representing 80.6% agreed that
debt management is relevant to the success of banks in Nigeria, 4 respondents
representing 11.1% disagreed while 3 respondents representing 8.3% were
undecided. Majority of the respondents agreed that debt management is relevant to
the success of banks in Nigeria.

Table 4.2.2: Debt management instrument is effective in banks in Nigeria

Response Frequency Percentage%
Agree 31 86.1
Disagree 4 11.1
Undecided 1 2.8
Total 36 100
Source: Field Survey 2018

The table above reveals that 31 respondents representing 86.1% agreed that
debt management instrument is effective in banks in Nigeria, 4 respondents
representing 11.1% disagreed while 1 respondents representing 2.8% were
undecided. This implies that so far debt management instrument is effective in
banks in Nigeria.

31
Table 4.2.3: Debt management has helped to reduce business failure
Response Frequency Percentage%
Agree 23 63.9
Disagree 10 27.8
Undecided 3 8.3
Total 36 100
Source: Field Survey 2018

The table above reveals that 23 respondents representing 63.8% agreed that
debt management has helped to reduce business failure, 10 respondents
representing 27.8% disagreed while 3 respondents representing 8.3% were
undecided. This implies debt management has helped to reduce business failure.

Table 4.2.4: Effective Management of business fund helps to reduce bad debt.
Response Frequency Percentage%
Agree 25 69.4
Disagree 8 22.2
Undecided 3 8.3
Total 36 100
Source: Field Survey 2018

The table above reveals that 25 respondents representing 69.4% agreed that
effective Management of business fund helps to reduce bad debt, 8 respondents
representing 22.2% said disagreed while 3 respondents representing 8.3% were
undecided.

Table 4.2.5: Wrong implementation of business organizations policy has negative

effect on banks’ loan
Response Frequency Percentage%
Agree 29 80.6

32
 Disagree 6 16.7
Undecided 1 2.8
Total 36 100
Source: Field Survey 2018

The table above reveals that 29 respondents representing 80.6% agreed that
wrong implementation of business organizations policy has negative effect on
banks’ loan, 6 respondents representing 16.7% disagreed while 1 respondent
representing 2.8% were undecided. This implies wrong implementation of business
organizations policy has negative effect on banks’ loan.

Table 4.2.6: Effective management of debt has a significant effect on

organizational performance
Response Frequency Percentage%
Agree 26 72.2
Disagree 4 11.1
Undecided 6 16.7
Total 36 100
Source: Field Survey 2018

The table above reveals that 26 respondents representing 72.2% agreed that
effective management of debt has a significant effect on organizational
performance, 4 respondents representing 11.1% disagreed while 6 respondents
representing 16.7% were undecided.

Table 4.2.7: The problem of debt management posed serious threat to the whole
financial sector of the country
Response Frequency Percentage%
Agree 23 63.9
Disagree 10 27.8
Undecided 3 8.3
Total 36 100
Source: Field Survey 2018

33
 The table above reveals that 23 respondents representing 63.8% agreed that
The problem of debt management posed serious threat to the whole financial sector
of the country, 10 respondents representing 27.8% disagreed while 3 respondents
representing 8.3% were undecided.

Table 4.2.8: Bad debt is a problem that financial institutions try to avoid
Response Frequency Percentage%
Agree 29 80.6
Disagree 6 16.7
Undecided 1 2.8
Total 36 100
Source: Field Survey 2018

The table above reveals that 29 respondents representing 80.6% agreed that
Bad debt is a problem that financial institutions try to avoid 6 respondents
representing 16.7% disagreed while 1 respondent representing 2.8% were
undecided. This implies bad debt is a problem that financial institutions try to
avoid.

Table 4.2.9: The easiest way to reduce bad debt is to reduce the amount of loans
granted.
Response Frequency Percentage%
Agree 25 69.4
Disagree 8 22.2
Undecided 3 8.3
Total 36 100
Source: Field Survey 2018

The table above reveals that 25 respondents representing 69.4% agreed that
the easiest way to reduce bad debt is to reduce the amount of loans granted, 8

34
respondents representing 22.2% said disagreed while 3 respondents representing
8.3% were undecided.

Table 4.2.10: Provision for bad and doubtful debts rises steadily in banks annual
reports
Response Frequency Percentage%
Agree 29 80.6
Disagree 4 11.1
Undecided 3 8.3
Total 36 100
Source: Field Survey 2018

The table above reveals that 29 respondents representing 80.6% agreed that
Provision for bad and doubtful debts rises steadily in banks annual reports, 4
respondents representing 11.1% disagreed while 3 respondents representing 8.3%
were undecided.

4.2 Test of Hypotheses

Hypothesis One

Ho: Debt management is not relevant to the success of banks in Nigeria

Hi: Debt management is relevant to the success of banks in Nigeria

Using the information in table 4.2.1, hypothesis one (1) can be tested with the aid
of chi-square to know whether debt management is relevant to the success of banks
in Nigeria.

X2 = ∑ (fo-fe)2/fe

Where

35
Fo = the observed frequency

Fe = the expected frequency

X2 = Chi- square.

Response Fo Fe Fo-Fe (Fo-fe)2 (Fo-fe)2/fe

Yes 29 12 17 289 24.1
No 4 12 -8 64 5.3
Undecided 3 12 -9 81 6.8
Total 36 0 ∑= 36.2
Fe = 36 x 1 = 12 (average) observed frequencies

As such is written along with the expected frequencies and work out the value of X

X2 = ∑ (fo-fe)2/fe

= 24.1 + 5.3 + 6.8 = 17

Degree of freedom (DF)

(R-1) (C-1) Or (n-1)

(3-1) = 2

The level of significance used is 5%.

Based on the calculation, the chi-square is 17. Using a 5% level of

significance and 2 degree of freedom, the table value is equal 5.99 (17 > 5.99) or
X2Cal > X2tab.

We reject the null hypothesis Ho and accept the alternative hypothesis Hi. This
implies that debt management is relevant to the success of banks in Nigeria.

Hypothesis Two

36
Ho: Debt management instrument is not effective in banks in Nigeria

Hi: Debt management instrument is effective in banks in Nigeria

Using the information in table 4.2.2, we can now test our hypothesis two (2)
with the aid of chi-square to know whether debt management instrument is
effective in banks in Nigeria.

X2 = ∑ (fo-fe)2/fe

Where

Fo = the observed frequency

Fe = the expected frequency

X2 = Chi- square.

Response Fo Fe Fo-Fe (Fo-fe)2 (Fo-fe)2/fe

Yes 31 12 19 361 30.1
No 4 12 -8 64 5.3
Undecided 1 12 -9 121 10.1
Total 36 0 ∑= 45.5
Fe = 36 x 1 = 12 (average) observed frequencies

As such is written along with the expected frequencies and work out the value of X

X2 = ∑ (fo-fe)2/fe

= 30.1 + 5.3 + 10.1 = 45.5

Degree of freedom (DF)

(R-1) (C-1) Or (n-1)

(3-1) = 2

37
The level of significance used is 5%.

Based on the calculation, the chi-square is 45.5. Using a 5% level of

significance and 2 degree of freedom, the table value is equal 5.99 (45.5 > 5.99) or
X2Cal > X2tab.

We reject the null hypothesis Ho and accept the alternative hypothesis Hi. This
implies that debt management instrument is effective in banks in Nigeria.

Hypothesis Three

Ho: Debt management has not helped to reduce business failure.

Hi: Debt management has helped to reduce business failure.

Using the information in table 4.2.3, we can now test our hypothesis three
(3) with the aid of chi-square to know whether debt management has helped to
reduce business failure.

X2 = ∑ (fo-fe)2/fe

Where

Fo = the observed frequency

Fe = the expected frequency

X2 = Chi- square.

Response Fo Fe Fo-Fe (Fo-fe)2 (Fo-fe)2/fe

Yes 23 12 11 121 10.1
No 10 12 -2 4 0.3
Undecided 3 12 -9 81 6.8
Total 36 0 ∑= 17.2
Fe = 36 x 1 = 12 (average) observed frequencies

38
As such is written along with the expected frequencies and work out the value of
X2

X2 = ∑ (fo-fe)2/fe

= 10.1 + 0.3 + 6.8 = 17.2

Degree of freedom (DF)

(R-1) (C-1) Or (n-1)

(3-1) = 2

The level of significance used is 5%.

Based on the calculation, the chi-square is 17.2. Using a 5% level of

significance and 2 degree of freedom, the table value is equal 5.99 (17.2> 5.99) or
X2Cal > X2tab.

We reject the null hypothesis Ho and accept the alternative hypothesis Hi. This
implies that debt management has helped to reduce business failure.

4.3 Discussion of Findings

The findings of this research work reveals that debt management is relevant to the
success of banks in Nigeria. Banks generally cannot perform well without putting
in place adequate measure to control and manage their debt. A situation where bad
debt becomes heavy, it weigh down the institution. So, banks in Nigeria are doing
their best to control their debt and reduce bad debt. The study also found that debt
management has helped to reduce business failure. Business failure is inevitable
without proper management of debt both by financial institutions and other
organizations. The success of any business enterprise is anchored on their ability to
control their financial inflows and outflows. Management of finance especially of

39
debt becomes paramount for the success of the business. It helps in the
management of business fund and avoid misappropriation.

CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary
In this study effort were made to evaluate “The Effect of Bad Debt Management

on Profitability in the Bank Industry in Nigeria with special reference to Union

Bank, Lokoja”. From the hypothesis tested in chapter (4) of this study the result

shows that debt management is relevant to the success of banks in Nigeria. Banks

generally cannot perform well without putting in place adequate measure to control

and manage their debt. A situation where bad debt becomes heavy, it weigh down

the institution. So, banks in Nigeria are doing their best to control their debt and

reduce bad debt. The study also found that debt management has helped to reduce

business failure. Business failure is inevitable without proper management of debt

both by financial institutions and other organizations. The success of any business

enterprise is anchored on their ability to control their financial inflows and

outflows.

5.2 Conclusion

In conclusion, lending involves more risk than virtually any other banking

activities. Not all loans should be granted. A profitable loan, which is not safe,

should not be granted. The attitude of most borrowers towards loans and advance

40
granted to them should not be ignored – as they regard such credit facilities as their

own share of the national cake. Moreover, some fraudulent bank officials receive

bribe before approving loans, some officials still bargain the percentage of the

credit to be given to them before the approval is made. These eventually lead to

poor appraisal of such facility and as well in danger of becoming a doubtful debt

because such a bank officials will lack the moral justification to pursue and recover

the loan. Furthermore, failure of banks to make use of trained, qualified and

experienced personnel in their credit management is a problem that should be

addressed Management should therefore analyze the nature of risk carefully before

extending credit. Efficient and effective credit management remains a hidden

treasure the exact value of which undiscerning boards may be unaware. Efficiency

should be predicated on a high quality credit management and adherence to

professional banking ethics.

5.3 Recommendations

Based on the above findings the researcher recommended the following:

1. The supervisory authorities should enforce standards so as to address the issue

of poor management of funds meant for credit disbursement.

41
2. The capital base of finance institutions should be strengthened in order to

mobilize domestic savings and promote banking culture among low-income

groups.

3. There is a need to reduce the expenses which weigh heavily on the earnings of

the institutions if breakeven point is to be attained in record time.

4. The Central Bank of Nigeria in collaboration with some development partners

should organize training for staff of finance institutions. And the institution on

their own part should continually train and retain their human capital, segment and

build up in-depth knowledge of the market, develop appropriate products and

services for small enterprises.

5. The training of clients on loan usage, management and repayment is very

important as this will reduce loan losses. The training should come in form of

counseling, mentoring, and other form of support.

6. Management of Banks should always ensure that risk management procedures

of the bank are followed in loan approval and disbursement to reduce the risk of

high rate of bad debts.

7. All employees involved in bank operations should be given on the job training in

all the department of the bank so that they can function effectively in all the

sections of the bank.

42
43
 REFERENCE

Ahmad, N. & Ariff, M. (2007) “Multi-country study of bank credit risk

determinants “International Journal of Banking & Finance, 5(1), 135-152.

Babade, T. (2003). Public Finance. Akure, Ondo State: Bosem Publisher.

Babalola, J.A (1999). “People Bank of Nigeria, Review and Update”Abuja:CBN

Balogun, E.D. and Alimi, A. (1988). Loan Delinquency among Small Farmers in
developing countries: A case study of small-farmers credit programme in
Lagos State of Nigeria, CBN Economic and financial Review.

Berger, A. N. and De Young, R. (1995), Problem Loans and Cost Efficiency in

Commercial Banks, Centre for Financial Institutions Working Papers,
Wharton School Centre for Financial Institutions, University of Pennsylvania.

Diamond, D.W., & He, Z. (2011). A theory of debt maturity: The long and short of
debt overhang. Chicago: University of Chicago.

ESCAP (2006) “Manual on Effective Debt Management” New York: United

Nations Publication.

Fofack, H. (2005), Non Performing loans in sub- Saharan Africa: Causal Analysis
and Macroeconomic implications, World Bank Policy Research Working
Paper no. WP3769.

Goldstein, H. & Turner, R. (2006). “The History, Principles & Practice of

Banking” London: George Bell & Sons.
Gorter, N. & Bloem M. (2002). “The macroeconomic statistical treatment of Non-
Performing Loans, Publication of the Organization for Economic Corporation

44
 &Development”[http://www.dbj.go.jp/english/IC/active/hot/adfiap/pdf/nagara
jan.pdf], (accessed 9th March, 2017).

Johnson, S. (2003). Debt maturity and the effects of growth opportunities and
liquidity risk on leverage. Review of Financial Studies 16, 209-236.

Kohansal, M.R. and Mansoori, H. (2009). Factors Affecting on Loan Repayment

Performance of Farmers in Khorasan-Razavi Province of Iran, Conference on
International Research on Food Security, Natural Resource Management and
Rural

Oguntade, O. (2006). Assessment of the Impact of Debt management Techniques

in Economic Development of Nigeria.

Ojo, J. A. (2004). “An overview of the Nigerian banking system, Working Paper,
Department of Finance” University of Lagos, Nigeria.

Okpugie, G. (2006). High Microfinance Interest Rates Cause Loan Defaults in

Nigeria, the Guardian, Volume Journal of Business and Management 10(2).

Uremadu, S. O. (2004) “Core Bank Management” Concepts & Application”

Enugu: Precision Publishers.

45
 APPENDIX I
Department of Accountancy,
School of management studies,
Kogi state polytechnic, Lokoja
P.M.B 1101,
Lokoja,
Kogi State.
Dear Sir,

APPLICATION FOR RELEVANT DATA AND INFORMATION

I am a final year student of department of Accountancy (HND) in a research

study on “The Effect of Bad Debt Management on Profitability in the Bank

Industry in Nigeria with special reference to Union Bank, Lokoja”.

The aim of conducting this questionnaire is not fault finding but get facts for

problem solving.

May I solicit for your help in answering the questions below and I would

like to assure you that every information you give will be treated with strictest

confidence and will be solely for academic purpose.

I shall be grateful if you answer the following questions.

Thanks.

Yours faithfully,

HALIDU MUSA IBN.

46
 APPENDIX II
QUESTIONNAIRE

Introduction: Please tick in the box corresponding to your response.

1. Sex distribution of respondents
Male ……………………………………..
Female……………………………………
2. Age distribution of respondents
Under 25………………………………….
26------35…………………………………
36------45…………………………………
46 years and above………………………
3. Marital status of the respondents
Married…………………………………...
Single……………………………………..
Divorced………………………………….
1. Educational qualification
SSCE/GCE/NECO……………………….
OND/NCE………………………………….
HND/BSC…………………………………
MBA/MSC/MPA………………………….
2. Which management cadre do you belong to in the institution?
Top management…………………………
Middle management………………………
Lower management……………………….
3. How long have you been working?
0-------5……………………………………
6-------10…………………………………..

47
11-----15…………………………………..
16------20………………………………….
21 and above……………………………...
4. Distribution According to Department
Administrative Dept.…………………………………………………
Customer Care Dept……………………………………………….
Teller Dept.……………………………………………………..
SECTION B.
1. Debt management is relevant to the success of banks in Nigeria
Agree… Disagree Undecided
2. Debt management instrument is effective in banks in Nigeria.
Agree… Disagree Undecided
3. Debt management has helped to reduce business failure
Agree… Disagree Undecided
4. Effective Management of business fund helps to reduce bad debt.
Agree… Disagree Undecided
5. Wrong implementation of business organizations policy has negative effect on
banks’ loan
Agree… Disagree Undecided
6. Effective management of debt has a significant effect on organizational
performance
Agree… Disagree Undecided
7. The problem of debt management posed serious threat to the whole financial
sector of the country
Agree… Disagree Undecided
8. Bad debt is a problem that financial institutions try to avoid
Agree… Disagree Undecided

48
9. The easiest way to reduce bad debt is to reduce the amount of loans granted
Agree… Disagree Undecided
10. Provision for bad and doubtful debts rises steadily in banks annual reports
Agree… Disagree Undecided

49