TABLE OF CONTENTS

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              SIGNIFICANCE OF THE STUDY             

1.5              LIMITATION OF THE STUDY                  

REFERENCE                                                

CHAPTER TWO:

2.0              REVIEW OF RELATED LITERATURE   

2.1              GENERAL REVIEW                                               

2.2              OBJECTIVE OF CREDIT POLICY GUIDELINES

2.3              INSTRUMENTS OF CREDIT GUIDELINES

2.4              CREDIT GUIDELINES “HISTORICAL

 PERSPECTIVES                                                     

REFERENCE                                    

CHAPTER THREE

3.0              RESEARCH DESIGN AND METHODOLOGY

3.1       SOURCES OF DATA                                              

3.2              LOCATION OF DATA                                            

CHAPTER FOUR

4.1              FINDINGS                                                                

CHAPTER FIVE

5.0       RECOMMENDATION AND CONCLUSIONS    

5.1              RECOMMENDATION                                            

5.2              CONCLUSIONS                                                      

BIBLIOGRAPHY                                                    

CHAPTER ONE

INTRODUCTION

1.1                               BACKGROUND OF THE STUDY

            One important factor affecting the level of economic activities in any economy is change in supply.  These changed affects directly the rate of spending by the citizen of the country.  It is therefore, because of the economic importance of monetary that the monetary authorities has devoted time and resources towards money management with a view of reaping the benefits inherent therein.

            The credit guideline, which is my topic of study, has formed the apex instrument used by monetary authorities in Nigeria to influence economic activities.  The guidelines are informed of central bank of Nigeria monetary policy circulars prescribing sectoral and aggregate increase and decreasing in credits by the commercial and merchant banks.

            According to Anyanwu J.A. (1998) the credit guidelines can be used to regulate the pace and content of economic in an economy.  This involves authorities interference with the volume and direction of credit by the commercial and merchant banks to those sectors of the economy.  This is why the government divided the economy into major sectors, the preferred or high priority sector and the less preferred or high priority sector and the less preferred or “others” sector.

            The preferred sector comprises of agricultural industrial or manufacturing enterprises residential building construction, exports and essentials services sub-sectors.

            The government has since the introduction of the credit guidelines in 1964, being urging banks to grant more credit facilities to this sector or order to boost the rate of economic development in the country.  The less preferred sector of the economy also comprises of general commerce, government and “others”.  Government also urges the banks to allocate less funds or exercise restraint in granting loans and advances to this sectors because of the affects it this sectors because of the affects it would have no the general price level.

            Credit guidelines could also be regarded as an anti-inflationary techniques preventing the flow of funds to those sectors.  Of the economy that are very sensitive to inflationary pressures.

            According to Orjih .J. (1996): credit Guidelines is the policy sp0elt out by the central bank of Nigeria CBN, which regulates the credit creation of the commercial banks.

            This control measure was adopted by the CBN for achieving the objectives of general economic policy.  It changes the volume, quantity, availability cost and direction of money and credit in a given economy.

1.2       STATEMENT OF THE STUDY

i.                    Despite the efforts of the monetary authorities in order to achieve the objective of the guidelines/performance has fallen far below the projected level.  Several factors could be identified to account for the failure to achieve these set objectives.  These factors form the basis of the statement of the study and includes some of the credit guidelines measures are ineffective to tackle the economic problems.

ii.                  The problem of fining and operational lags, which exist between problem identification, formulation and implementation of credit guideline.

iii.                Lack of complete autonomy on the part of the CBN to discharge its monetary function affectively.

iv.                Lack of coordination in major problems and unbecoming activities of the government in fueling inflationary pressure in the economy.

1.3       OBJECTIVES OF THE STUDY

            With the above problems in mind, the objectives of this study therefore are:

1.                  To highlight the general effects of the specific effects of credit guideline on the Nigeria economy in the terms of availability of funds.

2.                  To reseal how often and to what extent the guidelines, being the most popular weapon of central in Nigeria have been used by the monetary authorities to influence the credit base of the economy.

3.                  To reveal the effectiveness of central bank of Nigeria (CBN) in facing the banks to comply with the policy guidelines.

4.                  To show the effectiveness or otherwise of the credit guildelines in combating inflation in the economy.  This will be revealed by the economy.  This will be revealed by the movement of the price index.

5.                  To elaborate the salutation that calls for the use of credit guidelines as an alternative to general monetary weapons.

6.                  To show the impact of the credit guidelines has on the economic development of the country.  The movement of industrial index will reveal this.

7.                  To make recommendations for the effective improvement of the credit guidelines in Nigeria.

1.4             SIGNIFICANCE OF THE STUDY

      This study not completely, exclusive, will serve as an impute for these intending to carryout study on this or other related topics.

      For student and those who do not know the meaning and instruments of credit guideline, this study will serve to clear the doubt.  A proper understanding of the diagnosed factors inhibiting the realization of the credit guidelines will help the monetary authorities and the citizens at large gear up the economy towards the attainment of optimum rate of growth.