THE IMPACT OF INTEREST RATE DEREGULATION ON COMMERCIAL BANKS’ LENDING OPERATIONS IN NIGERIA (A SURVEY OF UNION BANK OF NIGERIA PLC ENUGU

1.1BACKGROUND OF THE STUDY  There had been administrative control on the nation’s interest rates until July 31, 1987 when, in consonance with the spirit of the structural Adjustment programme (SAP) of the Federal Government the Central Bank of Nigeria issued a circular on interest rates bordering on the deregulation of this financial sector of the economy. 
As a signal to the direction, the Central Bank wanted the interest rate to go, the minimum Re-discount Rate (MRR) was raised from 11 to 15% which now peaks at 18.5%. 
The apex financial institution (CBN) declared that interest rates payable on deposits or chargeable on loans and advances were henceforth to be determined by the interplay of the market forces of demand and supply. 
Nigerians being what they are agitative and speculative went to town some decrying the policy as the last straw that would break the back of our fragile economy, others extolled the policy as the best and boldest steps ever taken towards the revamping of the ailing economy.  These divergent views of the financial experts both in the academic and in the Banking sector about the likely impact of the interest rate deregulation motivated me to appraise the impact of the deregulation on commercial banking operation. 
Notable among those who bemoaned the deregulation of interest rate was Abiodum (1987).  According to him, Deregulation a fragile economy like ours will have the overall effect of dampening it since the high interest rate will cause slow down investment as borrowing will be curtailed. 
But this view was opposed by Iklude (1987) 2.  he was of the view that “interest rate deregulation will not only bring relief to the financially repressed economy but will ensure a real return on deposit which has over the year been negative. 
What these argument  boiled down to was that interest rate deregulation would lead to efficient allocation of financial market resources because interest rate will now reflect relative scarcity and relative efficiency in different uses.                                                                                                                                                                                                                
According to Abraham Nwankwo (1987) 3 “Bigger banks will price small ones out at the market by lending cheep to customers and paying them interest rate on their deposits”.  It is in the light of the controversies that accompanied the interest rate deregulation that prompted the deregulation on commercial Bank lending operation.
TABLE OF CONTENTS TITLE PAGE IIAPPROVAL PAGE IIIDEDICATION IVACKNOWLEDGEMENTVPROPOSAL VIIILIST OF TABLES TABLE OF CONTENTS IX
CHAPTER ONE 1.0INTRODUCTION 11.1BACKGROUND OF THE STUDY 11.2STATEMENT OF THE PROBLEM 31.3OBJECTIVES OF THE STUDY 61.4SIGNIFICANCE OF THE STUDY 71.5SCOPE OF STUDY81.6LIMITATION OF THE STUDY  81.7HYPOTHESIS 101.8RESEARCH QUESTIONS 121.9DEFINITION OF TERMS 12NOTES. 15
CHAPTER TWO 2.0REVIEW OF RELATED LITERATURE2.1FINANCIAL REPRESSION HYPOTHESIS 162.2FINANCIAL REPRESSION IN NIGERIA 262.3RELATIONSHIP BETWEEN INTEREST RATE AND SAVINGS 342.4INTEREST RATE MANIPULATION BEFORE DEREGULATION382.5COMMERCIAL BANK AND FINANCIAL INTERMEDIATION. 402.6PRINCIPLES OF GOOD LENDING 402.7EFFECTIVE LENDING 442.8THE IMPACT OF INTEREST RATE SPECULATION ON UNION BANK OF NIG. PLC.45NOTES 47
CHAPTER THREE3.0RESEARCH DESIGN AND METHODOLOGY3.1POPULATION OF COMMERCIAL BANKS 533.2DETERMINATION OF SAMPLE SIZE 543.3DETERMINATION OF CUSTOMERS SAMPLE SIZE 553.3.1DETERMINATION OF BANK CUSTOMERS SIZE 60
CHAPTER FOUR4.0PRESENTATION AND ANALYSIS OF DATA68    4.1RATE OF RETURN OF QUESTIONNAIRES 684.2ANALYSIS OF LOAN AND ADVANCES OF UNION BANK OF NIGERIA PLC ENUGU694.3TOTAL DEPOSIT LIABILITIES OF UNION  BANK OF NIGERIA PLC ENUGU 704.5ANALYSIS OF QUESTIONNAIRE TO CUSTOMER 79
CHAPTER FIVE 5.0FINDINGS, RECOMMENDATION AND CONCLUSION5.1SUMMARY OF FINDINGS945.2RECOMMENDATION TO: 98(i)CENTRAL BANK 99(ii)COMMERCIAL BANK 99(iii)CUSTOMERS 101BIBLIOGRAPHY 102APPENDIX (I)COVERING LETTER TO THE QUESTIONNAIRE106 (II)QUESTIONNAIRE