AN APPRAISAL OF THE EFFECTS OF THE DEVELOPMENT OF NEW CONSUMER CREDIT IN NIGERIAN COMMERCIAL BANKS [A CASE STUDY OF DIAMOND BANK LTD]
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AN APPRAISAL OF THE
EFFECTS OF THE DEVELOPMENT OF NEW CONSUMER CREDIT IN NIGERIAN COMMERCIAL BANKS
[A CASE STUDY OF
DIAMOND BANK LTD]
ABSTRACT
Due to the rapid changes in the
business of banking and rapid changes in the business environment in which such
business are being conducted, the issue of consumer credit service or product
cannot be over emphasized.
Banks are established to make profit.
Are these profits made at the expense of the customers or is it as a result of
the service produced by these banks? Nowadays banks have seen the urgent need
for the provision of right type of quality services at any particular point in
time and therefore have taken positive steps towards the development of
consumer credit service and product that will meet the needs of customers.
In spite of the fact that banks develop
this consumer credit services or product in order to cope with cut throat
competition existing in the banking scene, banks should know the customers
needs should be the number one factor to consider as satisfying their needs is
the ultimate objective of the new consumer credit services.
This piece of work aim to find out how
customers to react to this new consumer credit service or product and to find
out if banks developed this credit service to meet the needs of customers. This
research work contains the following in its chapters.
A general discussion of consumer credit
product as seen by different people, objective of the study, its scope,
limitations and definition of terms.
It also contains the method used in
collecting relevant data and the way the questionnaire were distributed and
compared and the treatment of data. The data gotten from the research survey
were analyzed and interpreted.
Finally, the summary of finding,
conclusion on the research and recommendation will also be made so to help
achieve a better tomorrow.
TABLE OF CONTENT
CHAPTER
ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
1.2 STATEMENT OF THE
PROBLEM
1.3 OBJECTIVE OF THE STUDY
1.4 RESEARCH QUESTION
1.5 HYPOTHESES
1.6 SCOPE OF THE STUDY
1.7 SIGNIFICANCE OF THE
STUDY
1.8 LIMITATIONS OF THE STUDY
1.9 DEFINITIONS OF TERMS
REFERENCES
CHAPTER TWO
2.0 LITERATURE REVIEW
2.1 THEORETICAL REVIEW
2.1.1 COMMERCIAL
BANKS CONSUMER CREDIT PRODUCT
2.1.2 DIAMOND BANK AND
THEIR NEW CREDIT
2.1.3 FACTORS
AFFECTING CONSUMER CREDIT DEVELOPMENT
2.1.4 PROBLEM OF
CREDIT DEVELOPMENT
2.1.5 BENEFIT OF NEW
CONSUMER CREDIT DEVELOMENT
2.2
EMPIRICAL REVIEW
REFERENCES
CHAPTER
THREE
3.0 RESEARCH
METHODOLOGY
3.1 RESEARCH DESIGN
3.2 AREAS OF STUDY
3.3 POPULATION OF THE
STUDY
3.4 SOURCES OF DATA
3.5 SAMPLING METHOD
3.6 RESEARCH
INSTRUMENTATION
3.7 VALIDITY AND
RELIABILITY OF RESEARCH INSTRUMENT
3.8 METHOD OF
DATA ANALYSIS
CHAPTER
FOUR
4.1 PRESENTATION AND
ANALYSIS OF RESULTS
4.2 TESTING OF
HYPOTHESIS NUMBER ONE
4.3 TESTING OF
HYPOTHESIS NUMBER TWO
4.4 TESTING OF HYPOTHESIS
NUMBER THREE
CHAPTER FIVE
5.1 FINDINGS
5.2 CONCLUSION
5.3 RECOMMENDATION
BIBLIOGRAPHY
CHAPTER
ONE
1.O
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
Banking
today is undergoing a radical transformation. The symptoms are obvious; new
players, new channels are appearing daily. This transformation is taking place
across all sectors of the banking industry.
The
financial sector with special reference to banking in Nigeria has come under
the searchlight in recent years not only because of its strategies role as
mediator of funds between the surplus and the deficit units but also as a
result of the problem militating the industry in terms of failure and eventual
death(Bankruptcy).
It
has become a thing of the past when bank manager fold their hands and roll in
armed chairs in their offices waiting for customers to look for them.
Commercial banks are faced with aggressive competition on everyday in their
businesses.
Banking
is a dynamic business and operates in a more dynamic society which bring
challenges to be the banks door steps daily and these challenges to tackled,
banks must develop consumer credit by either a way of introducing new ones or
improving the existing ones. The impact of ill health in banking sector left
nobody untouched ranging from the government, the regulatory authorities, the
bankers as well as the general public. It is in this spirit that predicting the
potential of failure in the sector becomes imperative if these actors/players
are to be rightly guided in their decision making ventures.
Moreover,
as banks grow their customers of different tastes and fashions grow and for
these target customers, banks must consider the development of imperative to
suit their customers taste.
This
research work is aimed at identifying the customer credit available in
commercial banks, how they could be developed, problems facing their
development and the prospects of the satisfaction of the target customer taking
Diamond Bank as a case study.
Therefore,
new consumer credit development and quality should not be over emphasized.
1.2
STATEMENT OF THE PROBLEM
Commercial
banks have been making relentless efforts towards the development of new
consumer credit in Nigeria. Yet many of the credits services development have
not been able to satisfy the needs of their target customers. As a result of
this, these consumers credit do not receive adequate patronage and resources
are wasted, this affects the bank profit negatively. However, there are many
had nuts to crack in the development of consumer credit services, which makes
it difficult for management to introduce new products even when the old ones
lack patronage. This affects the rate at which commercial banks develop
consumer credit and in generating income.
Again
some of the target customers are not aware of the existence of some
consumer credit of the banks, which makes such services lack patronage,
even when patronized, only a few people patronize them. Hence banks
efforts in their development become futile.
Furthermore,
customers at the banks are not adequately educated on the banks consumer credit
developed and some bank staffs are not properly equipped on the marketing of
financial services, which makes it possible for profitable opportunities
to be grouped in the banks, such lack of education render banks efforts
fruitless and resources used in developing such consumer services are wasted.
Finally,
some management of banks find difficult to segment market for their services in
that, the services receive little or no demand which at the end, render banks
effort unprofitable.
1.3
OBJECTIVES OF THE STUDY
Specifically,
this study intends to;
a.
Identify the difficulties encountered in the process of consumer credit
development in commercial banks
b. Determine whether
bank customers are really satisfied with the banks services or not, and why?
c. Find out the best
ways to educate the customers on the use of the banks credit and the best
way to create awareness of the existence such consumer credit.
d. Identify the best
way the banks consumer credit market could be segmented for a fruitful venture.
1.4
RESEARCH QUESTIONS
The
research questions are as follows;
a. To what extent
does the difficulties encountered in the process of consumer credit development
affect commercial banks?
b. What is the extent
of satisfaction of customers with commercial bank consumer credit?
c. What are the
effects of customers education on the usage and level of awareness on the
banks consumer credit?
d. What are the
effects of improper market segmentation of the new consumer credit
on the marketability.
1.5
RESEARCH HYPOTHESIS
The research hypothesis being an intelligent guess on the research question
could be obtained when the question are transformed as follows;-
1. Ho: The
difficulties encountered in the process of consumer credit development have no
effect on commercial bank services.
Hi: The difficulties encountered in the process of consumer
credit development have effect on commercial banks services.
2. Ho: The commercial
banks new credit have not satisfied customer
needs.
Hi: The commercial banks consumer credit have satisfied customers needs.
3. Ho: The education
of customers on the usage of new consumer credit and their level of awareness
have no effect on the banks consumer credit
development.
Hi:
The education of customers on the usage of new credit and their level of
awareness have effects on the banks consumer credit development.
4. Ho: Improper
market segmentation of the consumer credit have no effects on its
marketability.
Hi: Improper market segmentation of the consumer credit has effects
on its marketability.
1.6
SCOPE OF THE STUDY
Due
to some constraints, the researcher therefore limited the scope of the study to
only Diamond Bank Limited.
1.7
SIGNIFICANCE OF THE STUDY
The
study has both practical and academic significance as documented below:
1.
PRACTICAL SIGNIFICANCE
a. Through this
study, bank managers who have not been up and doing will sit up for they cannot
see things go in the negative direction and say that there is no problem.
b. This research work
will also help the commercial banks know the extent of the competition they are
facing and declare their stand with their banks in the same class or other
commercial institution rendering or affecting the same service type through the
development or innovation of new services in their regional branch and head
offices.
c. Moreover, this
work is equally valuable assets to the economy at large since good credit
development leads to banks profitability, which in turn leads to growth in the
economy.
2.
ACEDEMIC SIGNIFICANCE:
a. This work will be
useful in addition to existing numerous literatures for future research
reference.
b. It will also serve
as a partial fulfillment for the an award of (HND) Higher National Diploma in
Accountancy.
1.9
DEFINITION OF TERMS
1. Bank customers:
According to Orjih (1996) A person, firm or company may be termed a
customer which the banks only accepts.
2. Consumer Credit:
This is anything or specifically services for banks that can be offered
to a market for attention, acquisition, use or consumption.
3. Innovation: This
is the process of making changes to introduce new ideas, method etc.
4. Target Customer:
The particular banks customers to which the services are fashioned.
5. Bank Resources:
Banks finance that is used in investment.
6. Banks Service
Demand: This is the ability complied with the willingness to pay for particular
service at a particular time.
7. Market
segmentation: It is an approach to marketing in which the marketer splits the
total market into smaller, more homogenous groups and aims production and
selling strategies at these target markets.
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