The title of this project is The Impact of Bank Lending on Small-Scale industries, (A case study of some selected small-scale industries in Aba Metropoly). In the course of this study, four research questions were stated, while three research questions were formulated using percentage and statistical chi-square technique for the analysis respectively. A total of 127 copies of questionnaire were administered to respondent, while 120 copies were correctly completed and returned. The findings are: it was found that their exist a divergence of opinion regarding.  The reason for default and most appropriate way of improving bank credit to small-scale industries. In setting up policies for banks, for banks concerning small-scale industries, the main purpose of bank operation should not be over looked. In terms of the need for bank credit for the growth of small-scale industries both banks and small-scale entrepreneurs should  agreed that  there  is need for extra finance for small scale entrepreneurs feel that lending requirements for this  are not economically feasible and so tend lo to look for other sources  of funds  which is usually insufficient. Based on the above findings, the following recommendations are made: Banks should promote advisory services and counseling to small-scale industries. The option of refinancing of loans should be used regularly. The need for regular payment of interest and loans should be stressed by banks the need for government intervention is very necessary.



1.1         Background of the study

1.2         Statement of the problem

1.3         Objective of the study

1.4         Research question

1.5         Research hypothesis

1.6         Significance of the study

1.7         Scope and limitation of the study

1.8         Definition of terms



2.1         Need for industrial development in Nigeria

question and hypothesis

2.2         Important of small-scale industry

2.3         Problem of small-scale industry

2.4         How and why do we lend

2.5         Budgeting and discussion making in

small-scale industry

2.6         Bank and small-scale industry

2.7         Summary


3.1         The design of the study

3.2         The Area of the study

3.3         Population of the study

3.4         Sampling and sampling technique

3.5         Method of data collection

3.6         Method of data analysis



4.1         Preamble

4.2         Analysis of main data

4.3         Test of research hypothesis

4.4         Discussion of findings



5.1         Restatement of the problem

5.2         Summary of findings

5.3         Conclusion

5.4         Recommendations

5.5         Suggestions for further Study






  1. Response to research question table (1-13)
  2. Hypothesis Table (5, 8, & 9)




Banks as business concern must make profits in order to study in business. They usually have a range of multi-product services, which they render to the public, which are of crucial concern to the public, industries, depositors and regulatory authorities.

The main operation of banks is the lending of fund to other sectors of the economy through funds deposited by depositors. According to A. N Nwankwo (1987:164) he stated that:

Lending is considered effective of it successfully resources the bankers obligation of maximum profitability to share holders and maximum liquidity to the depositors. This is because highly profitable lending, which also ensures liquidity for depositors may always be effective.

Lending for commerce proposed may be considered effective in the profitability  and liquidity sense but may be ineffective in terms of maximum contribution to economic development. Similarly, lending to small-scale industries may be considered ineffective in the development sense. This  effective lending in a development economy like Nigeria may be defined as that equation of  lending which maximums  the objective of liquidity and profitability and the economy’s objectives of development. In Nigeria, the need for small-scale industries when was not fully realized until the early eighties when government started laying emphasis on direct credit to small-scale industries. This was one of the main objectives of the economic reconstruction programme under the structural Adjustment Programme (SAP), which was meant to boast the level of economic activities in the economy. Under the monetary policy, the banks are to allocate 20% of their loan-able funds to small-scale industries. The banks that do not comply are to be penalized by the Central Bank Of Nigeria (CBN). However, the banks have undergone a lot of problem in gravity such loans.

They includes:

  1. High rate of default
  2. Amount spent of research and other portfolios as highly compared to the profit got from interest on the loans

iii.           Most applicants do not have any form of collateral.

All these factors have contributed to the low level of bank lending to small-scale industries. Although, government policies in the terms of economic development is to stimulate the establishment and growth of small-scale industries, which contributes both directly and indirectly to economic growth and to enable Nigeria to participate on an increasing extent in the ownership. The government of Nigeria industries a same as of balanced growth and to payment positions, It is against that background that the expansion of banks lending to small-scale industries can be fully appreciated.


While provision of credit to small-scale industries has concerned policy makers in Nigeria, the result has not been encouraging compared to the huge amount of resources expended. Banks are very reluctant to give credit to small-scale industries. The rate of failure of small-scale industries in economic development cannot be neglected.


The objective of this research is to analysis the impact of bank lending on small-scale industries.

  1. To evaluate, the impact of bank lending on acquisition of technological skill and capability building of small-scale industries.
  2. To identify the factors that affect bank lending to small-scale industries.

iii.           To determine the impact of bank lending to small-scale industries.

  1. To find out technologies mostly used in bank in lending to small-scale industries.


The research question must specifically raise question, which the work is set to answers. The research questions are to a very large extent similar to the purpose of the study. The only different however lies in the fact that the purpose loans in the form of statement, while the research question loans in question form. The question are as following:

  1. What is the impact of bank lending on technology skill and capacity building of small-scale industries.
  2. What are the factors that affect bank lending on small scales?

iii.           What are the impacts of bank lending on small-scale industries.

  1. What techniques are mostly used by bank in lending on small-scale industries?


A hypothesis is a proposition assumed the sake of argument or a theory to be proved or disapproved by reference to fault. It serves as a guild to a research work. Once stated, the research must try as much as possible not to used for the study.

  1. Ho:    Evaluation of bank lending on acquisition of     technology, skill does not play a significant role    to small-scale industries.

Hi:     Evaluation of bank lending on acquisition of     technology, skill plays a significant role to small- scale industries.

  1. Ho:    There are no factors that affect bank lending on         small-scale industries

Hi:     There are factors that affect bank lending on    small-scale industries

  1. Ho:    There is no impact of bank lending on small-scale       industries

Hi:     There is impact of bank lending on small-scale industries


Bank lending on small-scale industries particularly those with high contents of local value adders and providing them with technical services are matters to which we will devote great attention, In developing the economy of a nation, the development of small-scale industries are seen as an integral and fundament part of the nation’s broad policy of industries growth.

Small-scale business accounts for about eight percent of the total number enterprises in the country, thus what occurs in the sub-sectors to a large extent influences the other sectors of the economy. Therefore, the analysis of the research project will be useful to private individuals, the government and the general public as stated below;

  1. The small-scale business and prospective investors have the version of small-scale business will be able to receive reinvent information, which will assist in managing the finance of small-scale business.
  2. The commercial and merchant banks through this research will be in no doubt assisted to made useful impact for efficient performance.
  3. The public will be aware of the problems and prospects of small-scale industries in a perspective that will widen the knowledge of the public in Nigeria.
  4. Also the significant of this study will add to the existing literature about the constants and relevant fact, which will level to the improvement of the research problem.
  5. The study would help the federal and state government to ensure that various government policies are implement and request for recommendation will be provided to enhance performance.
  6. Finally, the research apart from being mandatory for the Higher National Diploma of Abia state Polytechnics, it will help to widen my academic horizon in the area of the subject matter.


LENDING: The act of giving money. Lending is one of the most important functions of the bank.

LIQUIDITY: The state of owning things of value that can easily be changed into cash.

QUANTUM OF LENDING: A very small quantity of lending.

GOVERNMENT POLICIES: Government plans of action, statement of ideas etc, and proposal or adopted by a government for a particular purpose.

COLLATERAL: Property offered by somebody as a guarantee that he will pay the loan simply put, is what he will pay the  loan  simply put, is what one give out in case he does not provide what is given to him on credit.

PROFIT: Additional money gained in business that is the different between the amount spent and the amount earned.

PORTFOLIO: Here, I mean a set of investment owned by a person, bank etc.

DEVELOPMENT: The action or process where new industries are encouraged in order to create jobs for the unemployed. The process of being developing or developed.

BANK: The organization or a place that provide a financial services. A place where money are kept for security reasons

REGULATORY AUTHORITY: Board establishment by government to ensure that its policies work in accordance with the law. They give orders and punish the offenders.

SMALL-SCALE: It can be seen as firms or companies with assets (including working capital but excluding land) not exceeding N750, 000 and paid employers up to 50 persons.