THE IMPACT OF MANAGEMENT INFORMATION SYSTEM ON BANK LENDING DECISIONS. (A CASE STUDY OF STANDARD TRUST BANK PLC, ENUGU)
1.1 GENERAL BACKGROUND OF THE SUBJECT MATTER
Standard trust bank Plc commenced operation in August 1997 as a commercial bank with five business offices driven by a board of directors a management team and staff focused on revolutionizing the Nigerian banking industry following the resolution of the board of directors at an extra ordinary general meeting on 19th July 2002 the bank became a public limited company (PLC), from the humble beginning, they have been able to record modest achievements, which makes them today one of the leading banks in Nigeria.
Standard trust bank remains one of the most stable and consistently growing banks in the country. Efficient assets actualization and Management resulted in the growth of balance sheet size from N984 million in 1997 to N21,343 billion in 1990 and N9,945 billion by the end of 2001/2001 financial year. The ban k has a full range of banking services and products provided to delight their customers. They include personal/corporate savings account standard care account, personal/corporate current account Domiciliary account standard flexi-fixed account and so in any business outfit, be it government or privates beyond, the moment of decision taking presents challenges to the executives.
Decision taking is a life wire of any organization as the future growth of the enterprise depends largely on the soundness and unsoundness of such decisions, for the banking sector in particular; the importance of valid decision in enhancing its growth and profitability cannot be over stretched. The banking industry in Nigeria is in a state of chaos.
Most of the banks are classified as distressed, some of them have been liquidated while some are ordered to recapitalize or face liquidation. The dangerous trend in the banking industry has sent a disturbing wave to the national economy. In a rapid reaction to salvage the banking industry and save the economy from collapses the government enacted the failed and established a tribunal to try the forever decision makers and takers in the banks who have contribute to the banks failure.
The utilization of management information system on banks lending decisions will make a lot of impact in enhancing banking growth and productivity. The usefulness of the management information cannot be restricted to the lending banks. Osisionma (1990) classified management information into three parts, which include store-keeping information, attention directing information and problem solving information. Management information contain such details as regard banks financial standing and long term viability, some of the ways banks lend money are through banks overdraft and other advances it can make to various categories of its customers. Before banks lend money they are interested in the ability of their ability to refund the loan at the appropriate time.
Management information is indispensable in granting such loan, overdraft and other advances also in monitoring the realized of the disbursed funds. Before the decision is reached management information should be sought for the choices as well as the outcome of the possible decision. Having critically estimated cost of each alternative and bearing in mind that the major aim of banks is maximizing profit, the management of the bank use the data and basis, provided in management information in taking decision that is in line with the goals of the organization.
Management information represents the real life situation of the banks, which cannot be ignored in lending. It is very useful in planning, co-coordinating. It is very useful in planning, coordination and control. Moreover, with management information every lending decision will be based on data that have first of all to be selected, collected, verified and subsequently utilized for growth, profitability and viability of the bank.
1.2 PROBLEMS ASSOCIATE WITH THE SUBJECT MATTER
Recent development in the banking industry in Nigeria has shown that most of the bank management and decision takers have grossly violate in their operation. Most affected in the violation is the banking regulation the misuse, abuse and total neglect of management information in bank lending decision.
Because of the importance of management information in enhancing banks growth and development, we have decided to investigate its impacts system in bank lending decisions especially in the era when so many banks are distressed and liquidated. The problems rocking the banking sector in Nigeria cannot go unaccounted for by the accountants who are first and foremost concerned with accountability and probity in financial industry, business entities and government department. As students of business management information contributes to the financial standing of this banks.
The problems in the banking sector has not only contributed to the crippling of the nations economy but has also negatively affected their hard earned money in the bank only to be told that bank have no money to pay them. This unfortunate development cannot continue indefinitely. We are required to tackle the problem. In this regard, it is pertinent to understand the impact of management information in causing eradicating and addressing problem facing banks.
Do knowledge of banks not earnings, working assets customers account in the bank and banks financial standing in it’s lending decision? Is management information necessary for the future investment growth and development of the bank? Is management information useful in bank planning, co-ordination and control?
1.3 PROBLEMS THAT THE STUDY WILL BE CONCERNED WITH
This study intends to be concerned with the following problems.
1 To position the bank for the higher goals it has set for itself through management information.
2 To improve the way of operation in the banks.
3 To change the perception of banks for the better.
4 To reaffirm the core valves of the banks.
5 To ascertain the type of management information made available to bank management.
6 To examine the extent to which bank management utilize management information system in lending decision.
7 To determine whether incidence of bad debts can be avoided, if bank management utilize management information system in their lending decision.
8 To suggest ways which usage of management information system can be made more affective in bank lending?
9 To make recommendation and ways of strengthening the position contribution of the banking sector to the national economy.
1.4 THE IMPORTANCE OF STUDYING THE AREA
This study is important in the sense that it will look at the impact of management information system on bank lending decision at standard trust bank PLC that has branches all over the federation.
It is hoped that through this study, some good contribution would be made to the existing stock of knowledge in this field.
This study will also act as a guide to decision makers in restructing the lending policy of their bank.
1.5 DEFINITION OF IMPORTANT TERMS
Management: This refers to the co-ordination of all the resource (4ms) of an organization through the process of planning, organizing, directing and controlling in other to attain the organizational objectives or goals.
Information: This is a fact told, heard or discovered to import knowledge.
Bank: This is a place where money or other valuable materials are kept. Bank is a deposited until required, an institution for keeping, lending, exchanging of money.
Lending: This means to give, afford, grant, in general to let.
1.6 REFERENCE USING APA METHODS
This study focuses on the impact of management information system on bank lending decision “with special reference to standard trust bank PLC, Enugu. The bank above was selected & information was obtained through oral interview, observation & distribution of questionnaire which enables the writer to ascertain the extent to which banks utilize management information system in their lending decision, the problem they have & efforts being made to alleviate the identified problems.