CAUSES AND IMPLICATIONS OF BAD DEBTS IN NIGERIA COMMERCIAL BANKS

The Nigeria Banking sector has witnessed a lot of set back in the last decade. This is as a result of series of huge bad debts which resulted to many banks going into liquidation. Undue mergers and acquisition has taken place in an effort to cope with the challenges of existence and survival as a result of financial distress which is mainly caused by irrecoverable debts.  It is in an effort to mitigate this problem that this research “Causes and Implications of Bad Debts in Nigeria’s Commercial Bank’s” is most necessary. This research reveals the causes of bad debts in commercial banks as: lack of adequate knowledge of project appraisal techniques, poor economic condition, lack of project monitoring, connected lending, deliberate falsification of account records by the prospective borrower, bad judgment by the banker etc. Once bad debt occurs, series of implication follow immediately or at least in the short run.  These implications adversely influence both the bank in question and the entire economy. To remedy these problems, the research recommended that banks employ only skilled diligent, discreet and professional bankers as their lending officers.  It is also important that the condition of the economy is re-engineered by the economic team.

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