IMPACT OF ACCOUNTING INFORMATION ON LENDING DECISION OF DEPOSIT MONEY BANKS IN NIGERIA

ABSTRACT The study examines the problem facing lending officers is how to correctly assess loan applicants in order to minimize loan defaults, in order to assess corporate credit applicants, lending officers rely on financial statements arid the computation or counting ratio. The reliance on financial statements would prove total to lending decision because the figures contained in them could be doctored to deceive or hoodwink the lending officer. More importantly, the rate of inflation would also make figures and ratios derived there to be out of tune with the present condition. Another problem encountered in lending is the unpredictable nature of the borrower on the one hand and the economy on the other hand. For instance, adverse economic conditions could render the payment of a loan facility impossible even when the debtor is genuinely serious of paying the principal inherent to the lender. At times the debtor may simply not be interested in paying back the loan. How then do the lending officers cope with the problem? In a research of this nature, it does not suffice to merely identify problems and discuss findings without actually offering recommendations to improve existing situation. The major objective of these recommendations is to improve the lending kills of loan officers by suggesting ways to utilize accounting information in their decision making in order to minimize loan defaults. Based on our findings from the study, we wish to make the following recommendations, when a lending officer presented with financial statements how much faith can he put in it? The interpretation of financial statements presented to bank loan officers by borrowers. Both prospective and current is one of the most important elements in the evaluation of commercial loan request. Statements prepared by professional auditors are generally considered more reliable than those prepared by others. Therefore, the lending banker is bound to encounter the greatest problem in the area of un-audited statement. ABSTRACT The study examines the problem facing lending officers is how to correctly assess loan applicants in order to minimize loan defaults, in order to assess corporate credit applicants, lending officers rely on financial statements arid the computation or counting ratio. The reliance on financial statements would prove total to lending decision because the figures contained in them could be doctored to deceive or hoodwink the lending officer. More importantly, the rate of inflation would also make figures and ratios derived there to be out of tune with the present condition. Another problem encountered in lending is the unpredictable nature of the borrower on the one hand and the economy on the other hand. For instance, adverse economic conditions could render the payment of a loan facility impossible even when the debtor is genuinely serious of paying the principal inherent to the lender. At times the debtor may simply not be interested in paying back the loan. How then do the lending officers cope with the problem? In a research of this nature, it does not suffice to merely identify problems and discuss findings without actually offering recommendations to improve existing situation. The major objective of these recommendations is to improve the lending kills of loan officers by suggesting ways to utilize accounting information in their decision making in order to minimize loan defaults. Based on our findings from the study, we wish to make the following recommendations, when a lending officer presented with financial statements how much faith can he put in it? The interpretation of financial statements presented to bank loan officers by borrowers. Both prospective and current is one of the most important elements in the evaluation of commercial loan request. Statements prepared by professional auditors are generally considered more reliable than those prepared by others. Therefore, the lending banker is bound to encounter the greatest problem in the area of un-audited statement.