ABSTRACT
Lack
of fund has been one of the major problems militating against the progress and
growth of our business organizations.
This is caused by a lot of factors such as low savings (Vicacious Circle of
Poverty), Ignorance of the Public to invest, mismanagement etc. There are many ways of solving the problems
of Finance and Providing adequate finance to our business organizatios such as
equity stock, savings, ploughing back profits, but for the purpose of this
research, we have to pay attention to loan and loan syndication.
TABLE OF CONTENTS
Title page
Approval page
Dedication page
Acknowledgement
Abstract
Table of Contents
CHAPTER ONE:
1.0 Introduction
1.1 The
Purpose of the study
1.2 Significant
of the study
1.3 Scope
of the study
1.4 Limitations
of the study
References
CHAPTER TWO:
2.1 Definition
of Syndicated Loan
2.2 Forms
of Syndicated credit finance
2.3 Procedures
for Syndicating a loan
2.4 Methods
of Syndicating loan
2.5 Advantages
of Syndicated loan as financing alternative
References
CHAPTER THREE:
3.1 Sample
Size
3.2 Sources
of Data
3.2.1 Secondary
Sources
3.3 Location
of Data
3.4 Method
of analysis
References
CHAPTER FOUR:
4.1 Summary
of Findings
References
CHAPTER FIVE:
5.1 Recommendation
5.2 Conclusion
CHAPTER ONE
1.0 INTRODUCTION:
The
relative insufficiency of funds for capital investment is a common factor in
every economy especially in developing countries like Nigeria. In every developing country, the low level of
capital investment manifest in high unemployment rates, low productivity and
corresponding low standard of living for greater majority of the population.
Finding
a solution to this problem of providing fund for capital investment has been a
major Pre-occupation of financial institutions in Nigeria. Beyond the traditional term loan, share
offers, bonds and so on, business organizations and financial institutions
alike have sought out avenue to tackle the problem of insufficient fund for
capital investment. One of the solutions
they have come out with is syndicated fund or multiple credit facilities, which
is aimed at spreading risks and weakening the impact of respecting laws and
regulations on lending by financial institutions.
Syndicate
has been defined as an association of industrialists, or financials or banking
consortium forced to carry out some industrial projects.
Accordingly,
loan syndication is basically defined as an agreement between two or more
leading financial institutions to provide a borrower with credit facility
utilizing common loan documentation.
The
spectacular growth of loan syndication as an alternative financial instrument
for business organization occurred as a response to several economic factors in
Nigeria.
Notable among these are:
- The
National Industrial Policy of 1989 which is aimed at:-
* achieving accelerated pale of industrial
growth in Nigerian economy.
* The introduction of structural adjustment
programme in 1986, culminating in the establishment of Naira, this made
imported machinery and equipment very expensive and requiring huge capital
outlays which most companies or financial institutions cannot comfortably
afford.
Also,
the study of the extent to which business organizations in the country employ
syndicated loan as an alternative financing means with particular reference to
Anambra, Rivers and Enugu
States respectively, has
been carried out in this study.
1.1 THE
PURPOSE OF THE STUDY:
The
purpose of this study includes inter – alis;
* An examination in general terms of the
various issues involved in loan syndication.
* To find out whether loan syndication is
really a new approach to or another form of borrowing.
* To synthesize the merits and demerits of
syndicated loan financing vis – a – vis other sources of medium and long term
financing both by cost and condencenless.
* To survey the extent and prospects of
loan syndication business in Nigeria,
analyzing critically the role of business organizations and financial
institutions.
* To find out whether or not loan
syndication can help in industrial development of the country, especially under
the current economic situation.
* To examine the extent of penetration of
syndicated loan financing among business organizations in the country.
1.2 SIGNIFICANT
OF THE STUDY:
The
attention of the researcher was drawn by the need for loan syndication in Nigeria
especially in the area of providing the borrower with credit facilities. This becomes obvious that will be a need to
grant study that could examine loan syndication as it affects the investment
and capital project outlays.
Therefore,
the significance of this study is to look into ways of making it easy for
financing a capital project, which requires a syndicated loan, and also to
encourage financial firms to jointly finance project, which one financial firm
cannot single – handedly finance. It is
hoped that after this study.
It
will be useful for every bank especially those in merchant banking and
development banking. It will also
provide information to general public on how to employ loan syndication as an
alternative business financing.
This
work is expected to be of immense values to the students in financial studies
and other related courses mostly Accountancy, Banking and Finance and so on,
since this is part of what they are going to practice in their various place of
work.
Lastly,
it will help the public and government and other institutions to formulate
suitable policy that will guide them in financing a big projects jointing with
other financing firm.
1.3 SCOPE
OF THE STUDY:
The
areas these research covered include practically the method through, which
business organizations source for their fund especially in terms of loan from a
group of financial institutions such as Commercial Bank, Merchant Bank,
Insurance Companies, Development Banks and Non-Financial Institutions like the
government thrift societies friends and relatives.
The
study will also focus on the different classes of loan that exist in the
financial institutions notably long term loan, medium term loan and short term
loan.
1.4 LIMITATIONS
OF THE STUDY:
The
first limitation which was obvious is the death of statistical data. Lack of statistical data from our financial
institutions like Central Bank of Nigeria (CBN) Ministry of Finance including
Commercial and Merchant Banks where the researcher visited to collect list of
corporations they have financed through syndicated loan adhered strictly to the
rule of secretly in banking, thus they refused to release such information.
Another
problem is the time constraint. A
research of this nature need relatively long time during which information for
accurate or at least near accurate inferences could be drawn constraint to the
researcher.
Lastly
as the cost, the researcher would have extended the survey to other states at
other empirical level and this would have produced accurate and more
comprehensive work but for other huge cost of transportation and accommodation
in other various states of the federation.
It is not possible.
REFERENCES
The
National Industrial Policy of 1989.
The Introduction of Structural Adjustment
Programme 1986.
Orjih John (1996) Elements of Banking, Enugu Rock
Communications page 66.
Orjih John and P. Okafor (2005) Financial
Institutions page 116.
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