INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Bad debt can be define as those credit facilities that banks grant to its customers, but for some inherent weaknesses, the full or part thereof can not be recovered due to creditors (banks), but full recovery of such debt is considered impossible. Bad debt can also be looked at as credit granted to the customers of the bank with very slim chance of recovering it.
The reason why this topic is of interest is that most of our banks are in the state of financial distress which is as a result of high degree of “problem loans” or simply bad debts. In addition, there has been as discrepancy between the public expectations and what is actually the liquidity and profitability positions of the high percentage of problem loans to the over all loans granted by these banks. I then consider this project as a plate form to investigate the major causes of bad debts in our commercial banks.
1.1 BACKGROUND OF THE STUDY
Bad debt can be define as those credit facilities that banks grant to its customers, but for some inherent weaknesses, the full or part thereof can not be recovered due to creditors (banks), but full recovery of such debt is considered impossible. Bad debt can also be looked at as credit granted to the customers of the bank with very slim chance of recovering it.
The reason why this topic is of interest is that most of our banks are in the state of financial distress which is as a result of high degree of “problem loans” or simply bad debts. In addition, there has been as discrepancy between the public expectations and what is actually the liquidity and profitability positions of the high percentage of problem loans to the over all loans granted by these banks. I then consider this project as a plate form to investigate the major causes of bad debts in our commercial banks.