ABSTRACT
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.
TABLE OF CONTENT
Title page
Approval page
Dedication
Acknowledgement
Abstract
Table of
content
CHAPTER
ONE:
1.0 Introduction
1.1 Statement of problems
1.2 Objective of study
1.3 Significance of study
1.4 Research hypothesis
1.5 Scope and limitations of this study
1.6 Definition of terms
CHAPTER
TWO:
2.1 Review related to literature
2.2 Background
of the loan syndication
2.3 Other
financial market
2.4 Internationalization
of the capital market
2.5 Purpose
of syndicating loan
2.6 Parties
to loan syndication
2.7 Contribution
of syndication in project financing
2.8 Problem
of prospect of loan syndication in the nigeria
financial market
CHAPTER THREE:
3.1 Research design and methodology
3.2 Sample procedure
3.3 Data collection
3.4 Data analysis techniques
3.5 Determination of the sample size
CHAPTER FOUR:
4.1 Data presentation and analysis
4.2 Test of hypothesis
CHAPTER
FIVE:
5.1 Summaries, conclusion and recommendation
5.2 Findings
5.3 Conclusion
5.4 Biography
5.5 Questionnaires and appendix
BIOGRAPHY
APPENDIX/QUESTIONNAIRE
CHAPTER ONE
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.
f. To highlight the prospect of loan
syndication to both the users of the loan and the bank that extend the credit.
SIGNIFICANCE OF THE STUDY
There are two main parties
to loan syndication;
a. The lender
b. The borrowers
The lender bank is appointed and is called the agent bank or
the lead bank. It the agent bank of the lenders and its main duty if monitor
the disbursement and utilization and repayment of the credit as per the lending
agreement.
The borrower consists of the following;
a. Individual customers
b. Operations.
The borrower will usably channels its request to a bank with
which it has already establish a relationship or alternatively to a bank it has
carefully chosen based on the perception or the easement of its expertise and
ability to deliver. It may also channel the request to a number of banks
calling for bids of offers with a bid to select the most favorable offer. The
bank of the borrowers choice which agree to raise the required amount is known
as the lead bank of the syndication
RESEARCH HYPOTHESIS
Ho: Loan syndication has not been applies to a syndication
extent by the Nigeria
enterprise in project financing
Hi: Loan syndication has been applies to a syndication extent
by the Nigeria
enterprise in project financing
Ho: Syndicated loan are not adequate to industrialist in Nigeria
Hi: Syndicated loan are adequate to industrialist in Nigeria
Scope and limitation of the study
This study deals with the Nigeria financial market and their
impact and contribution to the industrialist and to the economy in general
through granting of syndicated loan. This research also dealt briefly on other
countries financial market as it relates to loan syndication. One area of
militating the financial resources and the time available to carry out the
research in the same vain, non-reliability of the relevant data from the bank
posed a big problem while the inability of the bank official to release some of
the research work also affected the quality of the research.
DEFINITION OF TERM
a. Syndicated loan is normally carried out by merchant
bank through the coming together of the financial institution for the purpose
of providing large fund to the client who may or may not be a customer to all
the different institution participating in the execution of the loan facility.
The single idea is that each individual lender is bound by one loan agreement
as lender and borrowers.
b. Finical market: this is the market form which large
companies and financial enterprise attract long term investment fund through
the network of the financial institution and stock brokers licensed to perform
capital market function.
c. Loan: this is credit facility granted to a
customer which is installmentally repayable over a specified period of time
d. Financial house: a financial house is a financial
enterprise, which specialize in providing fund to buy major asset. On the other
hand, financial house are non-banking institution, which usually perform some
of the function of bank but on a small scale.
e. Lead bank: the bank of the borrowers choice
that agrees to raise the required amount either on a best effort base or under
written obligation.
f.
Agent bank:
this an administrator of the loan
g. Capital market: this is market for medium and
long-term loans. A merchant bank is a player in this market.
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