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THE IMPORTANCE
OF FINANCIAL INSTITUTION IN THE DEVELOPMENT OF SMALL SCALE INDUSTRIES
ABSTRACT
This
extended essay aims to appraise the importance of financial institution in the
development of small scale industries in Nigeria. The aim is to ascertain
the importance of financial institution and how these financial institution
support the growth and development of small scale industry. And the problems of
small scale industries that makes them efficient and how they are solve through
the hedge provided by financial institution through quality loan at subsidies
rate, insurance etc. It is necessary to give financial support to small scale
business because of their great function they perform in the economy. Finally,
the extended essay do not down that the content of this essay will eliminate
all the problem that small scale business has been facing. Its however, hoped
that the department will take cognizance of some of this essay and on them
accordingly.
TABLE OF CONTENTS
Title page i
Declaration ii
Approval page iii
Dedication iv
Acknowledgement v
Abstract vii
Table of contents vii
CHAPTER
ONE: INTRODUCTION
1.0
Introduction 1
1.1
Background of the Essay 1
1.2
Objective of the Essay 4
1.3
Significance of the Essay 5
1.4
Scope and Limitation 6
CHAPTER
TWO: LITERATURE REVIEW
2.0
Literature review 8
2.1
Small scale enterprises defined 8
2.2
Characteristics of small business
enterprise
to
the economy 13
2.3
Contribution of small scale industries
to economy 15
2.4
Problems of small business 16
2.5
Function of financial institution 21
2.6
Lending policies of commercial banks 22
CHAPTER THREE:
SUMMARY, CONCLUSION AND RECOMMENDATION
3.0
Introduction 27
3.1
Summary of findings 27
3.2
Conclusions 29
3.3
Recommendations 29
Bibliography 33
CHAPTER ONE
CHAPTER ONE
1.0
INTRODUCTION
This chapter
defined the meaning of financial institution, how they perform their function
on the small scale industries and how they help them to regulate their
business. It tells us the meaning of the small scale industries and the
historical background of the small sale industries how they perform their
function in the development of the Nigeria economy.
1.1
BACKGROUND
OF THE STUDY
Its
due to mention the ways of entering into business venture by bringing already
established business while the other way is to start a new business. In other
case, the entrepreneur need some prior business depends on answering the
following question correctly:
a)
Do I have the financial requirement of
the business intended to establish?
b) Where
can I obtain the finance need for the establishment?
c)
The availability of collateral
securities to obtain loan from banks.
d) What
is my financial record with banks?
e)
What type of business ownership do I
involve myself?
f)
Do I have the experience for the
management of my business?
g)
How large is the business going to be?
Your
answer should be useful in determining how much working capital you will need.
Its most people apply the term small scale business to be the local corner
delegestore, bakers shop, road side machine etc. this may be accurate enough
for general use since small firms operation on this scale in Nigeria.
But
most of this small business fold up even before they gain acceptance some if
the problem that could course business failure whether it is necessary for
someone to go into business are –
i.
Lack of Finance – Due to the fact that
finance are needed for initial capital as well working capital. It is necessary
to have enough finance to enable the business to give a better stand due to
lacks of collateral security to obtain loan from the banks lead to the failure
of some business.
ii.
Managerial Ability – Some entrepreneur
have now managerial ability that is they have low future vision which make
business to collapse.
iii.
Going into business with little or no
Experience.
iv.
Lack of Research – Planning in without
first resting the trouble water or a small scale.
v.
Failure to keep complete and accurate
records which the business will require to successful operations.
vi.
Failure to understand changing
economic conditions. Due to my observation the major problems of small scale
business is of finance. Because of lack of finance many business have died with
their aims and objectives without creating and impacts and the society through
the establishment of financial institutions some of the problems have being
solved.
1.2
OBJECTIVE
OF THE STUDY
All
researchers of project without aim and objectives will be meaningless. The aims
of this extended essay is to find out the role of the financial institution in
the development of Nigeria
economy and to create awareness of sub-sector. The study will also find out
what contributed to the general failure of the small scale business and what
are the solution to the problems in term of financial economic sector and
personal effect.
1.3
SIGNIFICANCE
OF THE STUDY
i.
The significance of this essay is to
serve as a reference point to the researchers, caption of industries government
as well as students who are intended in knowing the importance of financial
institution in the development of small scale industries.
ii.
The researchers have acquired
information about what small scale industries is, the importance and the
problem associated with small scale industries in Nigeria.
iii.
Another significance of this research
work is to encourage small scale industries on how to promote the business.
iv.
It also serve as a reference to the researcher that
discover the ways in which government contribute immensely for the development
of small scale industries.
1.4
SCOPE
AND LIMITATION
The
researcher would focused on the study of small scale industries in Nigeria i.e.
problem facing the sector are of the constraint was that of time to scope with
both class work and that of project work. As a result of that, time was shared
between class works and project research works. Since project limiting is not
the course that quantify the research for the reward of national diploma in
business studies.
Also lacks of
financial resource serves as one of the limitation in carrying out this
research. The cost of transportation and other expensive activities undertaken
in carrying out this future studies on the subject.
More
so without financial support from the government there is no way that small
scale industries can progress.
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