Ejike et al Greener Journal of Agricultural Sciences Vol. 3 (2), pp.137-144, February 2013 ISSN: 2276-7770 Research Paper Manuscript Number:120512314 DOI: http://dx.doi.org/10.15580/GJAS.2013.2.120512314 Agricultural Credit Risk and Default Management by Banks in Imo State, Nigeria Ejike R.D., *Ohajianya D.O., Lemchi J.I. Department of Agricultural Economics, Federal University of Technology Owerri, P.M.B 1526 Owerri, Imo State, Nigeria Corresponding Author’s Email: dohajianya @ yahoo. com Abstract: This study was designed to analyze agricultural credit risks and defaults management by banks in Imo State. Data were collected with the use of structured and validated questionnaire from 12 purposively selected bank branches and 72 randomly selected farmer loan beneficiaries in the state. Data were analyzed using means, percentages, frequency distribution and ordinary least square regression model. The standard deviations determined for riskiness of agricultural credit to farmers in the three zones (Owerri, Okigwe and Orlu zones) of Imo State were found to be N187,928.93, N146,586.56 and N154,805.41 respectively. Results of the regression analysis show that the related variables; supervision, viability, collateral, sanction, appraisal, and insurance are significant credit and default management techniques employed by banks in the study area in their course of lending to agriculture. It is therefore recommended that banks should put in place a comprehensive credit risk management process to identify measure, monitor and control credit risk and all material risks and where appropriate, hold capital against these risks to reduce risk of delinquencies and defaults, proper education of farmers on loan acquisition and application demands for appropriate collateral and enforcement of loan repayment obligations, recruitment of well trained and motivated staff are necessary precautions for effective credit delivery to the agricultural sector. Keywords: Credit risk, default risk, risk management, Banks, farmers, Imo State, Nigeria. Return to Content View [Full Article – PDF] [Full Article – HTML] [Full Article – EPUB] Reference: Agu CC (1998). Loan Management in Agriculture, in Ijere M and A Okorie (eds) “Readings in Agricultural Finance”. Longman Nigeria PLC. Lagos. Baye MR (2000). “Management Economics” Second Edition Irwin, Chicago, USA. Bhatia M (2008). A Portfolio View of Credit Risk, 2005, downloaded from http://www.gtnews.com/article/5909.cfm Central Bank of Nigeria (CBN, 1998). Briefs Research Development series, 30/5. Central Bank of Nigeria (CBN, 2006). Economic and Financial Review Vol. 25. No.4 Davies A, Kearns M (1992). Banking Operations: UK Lending and International Business, Pitman, New York. Egbe AB (1990). “Financial Institutions and Agricultural Finance: The Role of CBN”. Proceedings of a seminar organized by the CBN, CBN Lagos. Grinols EL (1994). “Microeconomics”. Second Edition. Irwin McGraw-Hill, Boston, USA. Harrington SE, Niehaus GR (1999). “Risk Management and Insurance”. Iwin Mc Graw-Hill, Boston, USA. Monetary Authority of Singapore (2003). Guidelines on Sound Risk Management Practices, MAS, Singapore. Nnanna OJ (2005). Beyond Bank Consolidation the Impact on Society, in CBN (ed). “Consolidation of Nigeria’s Banking Industry”. Proceedings of the Fourth Annual Monetary Policy Conference. Abuja, FCT. National Population Commission (2006). Population Census Statistics of Imo State. www.citypopulation.de//php/nigeria/pdf Olayemi JK (1998). “Elements of Applied Econometrics”. Published by Elishadai Global Ventures Ltd. Padmanabhan KP (1998). “Rural Credit Lessons for Rural Bankers and Policy Makers”. Intermediate Technology Publication Ltd, London. Sanderatne N (1986). “The Political Economy of Small Farmer Loan Delinquency” Savings and Development, Vol 4. No.10, pp 343-54. Soludo C (2005). Opening Remarks to Conference Participants, in CBN (ed). “Consolidation of Nigeria’s Banking Industry:” Proceedings of Fourth Annual Monetary Policy Conference. Abuja, FCT. The Punch (2006). Agricultural Credit Scheme. Editorial page comments. The Punch Newspapers, Ikeja Lagos. 9th March. Umoh PN (2005). Capital Restruction of Banks: A Conceptual Framework, in CBN (ed.). “Consolidation of Nigeria’s Banking Industry”. Proceedings of Fourth Annual Monetary Policy Conference. Abuja, FCT.
