Problem and Prospect of Credit Creation by Commercial Bank (A Case Study of Zenith Bank PLC)

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TITLE PAGE                                                                                                                                




TABLE OF CONTENTS                                                                                               


1.1 Introduction                                            

1.2 Statement of the Research Problem

1.3 Aim and Objectives of the Study       

1.4 Scope and Limitations of the Study  

1.5 Research Methodology                        

1.6 Sources of Data                                      

1.7 Significance or Justification of the study                                                     

1.8 Organization of the Study                                                                                


2.1 Literature Review                                                                                              

2.2 Functions of the Various Departments                                                        

2.3 Central Bank and Credit Creation of Commercial Banks           

2.4 Procedures for Creating Credit Facility                                         

2.5 Reason for Credit creation by the Commercial Banks               

2.6 Credit Management in Commercial Banks                                   

2.7 Step in Credit Management                                                             

2.8 Principle and Practice guiding Lending at Zenith Banks            

2.9 Credit administration and Securities acceptance to Zenith Bank Plc                                                 


3.1 Brief Historical of The case Study                     

3.2 Restatement of the Research Question and Hypothesis           

3.3 Procedure for Processing Collected Data                                                    

3.4 Research Methodology                                                                                    


4.1 A Brief Introduction of the Chapter                                                               

4.2 Presentation and Analysis of Data According to the Research Question                           

4.3 Problems encountered by Zenith Bank of Nigeria Plc as regard credit created                              


5.1 Findings

5.2 Observation                                                                                                                                      

5.3 Summary                                                                                                                            

5.4 Conclusion and Major Findings                                                                      






A commercial bank can be defined as an institution that accept deposits from customer and repay cash on demand. It can also be defined as financial institution that accepts deposits and other valuables from the public for safe keeping with the sole aim of making profit.

The idea of banking system was introduced in Nigeria 1892 with the establishment of an Africa banking co-operation. Another one was established in 1894 which was named British West Africa Bank. The British West Africa bank was later changed to chase merchant bank to become Standard Bank of Nigeria. In 1899, bank of 1917, Nigeria bank comes to existence but later, it was taken over bank of British West Africa in 1912. In 1917, it was the establishment of Nigeria Barclays bank.

The first indigenous bank came into existence in 1929, which was named Industrial and Commercial bank. Also, in 1931 witnessed the establishment of Nigeria Merchant Bank. Although, it was later closed down due to lack of funds, bad management coupled with large scale corruption.

Furthermore, the national bank of Nigeria was established on a sound footing but, due to greater post war activities, the bank was closed down. In addition between two survived bank which are; Africa Continental Bank (ACB) and Agbomogbe Bank which is now called Wema Bank Plc.

It was a booming era between 1957 and 1952 because eight banks were established but 1954, seven banks were closed down only Merchant bank survived. It was not long that the only surviving bank out of the seven that closed down in 1954 had its license withdrawn by the state government as a result of mismanagement, one misuse of government fund.

All banks in Nigeria were either owned by the state government or. federal government but this trend did not continue to the policy of privatization and commercialization embarked upon during Babangida’s Administration in 1989.

Commercial banks play very important roles in the allocation of fund to individuals and business organizations in the society.

One of the principal functions of commercial banks is the creation of credit facilities which is the process of distributing and disbursing of fund to potential user, at favourable terms and condition and making sure that the funds are effectively utilized to ensure the anticipation benefit to borrowing and lending banks.

Credit facilities are being enjoyed by the account holder i.e. individual and business organization respectively. It can be listed that traditional function of banks is financial intermediation i.e. their real is concerned with the monetary aspect of the economy which involve the mobilization of fund from savers scattered in the society and there are transfer as a credit to investors.

There are average business entrepreneurs who could not or were able to raise enough funds from their trade for expansion purpose or from other sources like through friends and others.

Their last result therefore, is to source for fund from the commercial bank which play little to the plight of the borrower.



The commercial banks in credit creation face some difficulties due to high level of illiteracy, which lead to many losses of funds. There is thus, a continued deterioration of the cua1ity of risk assets held by them. Commercial banks are generally the life wire and cornerstone of all economic and any nation and no economy within this present dispensation can survive without commercial bank.

The major factors that led to failure and distress of many commercial banks in Nigeria of recent is government frequent interventions. Despite the huge and various policies of the government on credit creation, the Nigeria economy seems not to have shown any meaningful development in terms of credit utilization. The research work is there after embarked upon to address the various problems associated with credit creation in commercial banks and how those banks can reduce the incidence of bad debts and poor management of credit facilities. If this situation is not  properly addressed, the ability of the commercial banks in meeting their customers financial needs and contribute to economic growth may not be achieved.


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Frontiers, E. (2021). Problem and Prospect of Credit Creation by Commercial Bank (A Case Study of Zenith Bank PLC). Afribary. Retrieved from

MLA 8th

Frontiers, Edu "Problem and Prospect of Credit Creation by Commercial Bank (A Case Study of Zenith Bank PLC)" Afribary. Afribary, 23 Dec. 2021, Accessed 29 Jun. 2022.


Frontiers, Edu . "Problem and Prospect of Credit Creation by Commercial Bank (A Case Study of Zenith Bank PLC)". Afribary, Afribary, 23 Dec. 2021. Web. 29 Jun. 2022. < >.


Frontiers, Edu . "Problem and Prospect of Credit Creation by Commercial Bank (A Case Study of Zenith Bank PLC)" Afribary (2021). Accessed June 29, 2022.