Thesis Abstract

Abstract
This research study aims to investigate the effectiveness of the Asset Management Company of Nigeria (AMCON) as a debt resolution tool in the Nigerian banking sector. The banking sector in Nigeria has faced challenges with non-performing loans (NPLs) which have implications for financial stability and economic growth. AMCON was established in 2010 to address the issue of NPLs by acquiring non-performing assets from banks and recovering the debts through various resolution strategies. The research will employ a mixed-method approach, combining quantitative analysis of financial data and qualitative assessment through interviews with key stakeholders in the banking and financial sector. The study will analyze the impact of AMCON's debt resolution strategies on the reduction of NPLs in Nigerian banks and evaluate the effectiveness of these strategies in restoring financial health to the banking sector. The findings of this research will contribute to the existing literature on debt resolution mechanisms and the role of asset management companies in addressing NPLs. The study will provide insights into the challenges and successes of AMCON in managing distressed assets and resolving debts in the Nigerian banking sector. The research outcomes will offer recommendations for policymakers, regulators, and financial institutions on improving debt resolution mechanisms and enhancing the effectiveness of AMCON in addressing NPLs. Overall, this research seeks to deepen understanding of the effectiveness of AMCON as a debt resolution tool in the Nigerian banking sector and its contribution to financial stability and economic development. By evaluating the performance of AMCON and its impact on reducing NPLs, this study aims to provide valuable insights for stakeholders in the banking sector to enhance debt recovery mechanisms and strengthen the overall financial system in Nigeria.

Thesis Overview

INTRODUCTION

1.1     BACKGROUND OF THE STUDY

Asset Management Company of Nigeria is one of the birth institution set up in the wake of financial crisis in the banking sector. Asset Management Company was set up on 19 July, 2010 and imposed with the responsibilities; of taking over non-performing loans which constitute a huge debt burden for the ailing banks. Consequently, the company has acquired non-performing risk assets of ailing banks amounting to about N2.8 trillion, which has further enhanced the banks liquidity, profitability, capital adequacy as well as their safety and soundness (Egwuatu, 2011). It is also worthy of note that this action saved the nation of N2 trillion (Sanni, 2011).  The companys functions also included Assisting banks dispose of  Assets in accordance with the provisions of the Act; They are to Hold, manage, realize and dispose of Eligible Bank Assets and collect the interest, principal and capital due and the taking over of collateral securing such assets. The company is also to ensure that financial returns on eligible assets are obtained in line with the provision of the act and carry out other functions relating to the management and collections of eligible bank asset. The study seeks to proffer an appraisal of the effectiveness of asset Management Company as a debt resolution tool in Nigeria banking sector.

1.2 STATEMENT OF THE PROBLEM

The function of AMCON was to serve as a special purpose crisis-resolution institution in the Nigerian banking sector. However, the company is faced with some challenges which includes political interference as a result of the non- consistency of tenureship of the governor of the central bank, policy changes and moral declination on the part of the financial institution who have better knowledge of the non- performing loans profiles, the lack of adequate funding is affecting the operations of the company in its effort to tackle non- performing loans in the economy. The issue of corruption involving high network individuals in government is also constituting a challenge to the effort of the company as governments transferred large amount of loans that had initially been extended by the originating banks based on political connections and/or fraudulent assets to the AMCs which are difficult to be resolved or to be sold off .The problem confronting the study is to appraise the effectiveness of asset management company as a debt resolution tool in Nigeria banking sector.

1.3 OBJECTIVES OF THE STUDY

The Main Objective of the study is to proffer an appraisal of the effectiveness of asset Management Company as a debt resolution tool in Nigeria banking sector; The specific objectives include:

    i.       To determine the nature and purpose of Asset management company of Nigeria.

 

  ii.       To appraise the level of bank non-performing loan profile in Nigeria.

 

 iii.       To investigate the effectiveness of asset Management Company as a debt resolution tool in Nigeria banking sector.

1.4 RESEARCH QUESTIONS

    i.       What is the nature and purpose of Asset Management Company of Nigeria?

  ii.       What is the level of bank non-performing loan profile in Nigeria?

 iii.       What is the effectiveness of asset Management Company as a debt resolution tool in Nigeria banking sector?

1.5 STATEMENT OF THE HYPOTHESES

The statement of the hypotheses for the study is stated in Null as follows:

H01: The level of the level of bank non-performing loan profile in Nigeria is low.

H02:  The effectiveness of asset Management Company as a debt resolution tool in Nigeria banking sector is low.

1.6 SIGNIFICANCE OF THE STUDY

The study seeks to promote accountability, transparency and prudence in the financial services sector in Nigeria. The effectiveness of the Asset management company of Nigeria would be enhanced if all stakeholders involving the banks, individuals and firms are committed to the course of a debt free economy that will promote the wellbeing and economic growth of the nation.

1.7 SCOPE OF THE STUDY

The study focuses on the appraisal of effectiveness of asset Management Company as a debt resolution tool in Nigeria banking sector.

1.8 LIMITATION OF THE STUDY

The study was confronted with logistics and geographical factors.

1.9 DEFINITION OF TERMS

NON-PERFORMING LOANS DEFINED

A non-performing loan constitute those loans considered as default for which neither the interest not capital has been paid within a period of 90 days.

SECURITISATION DEFINED

This is the process of redefining and repackaging of homogenous illiquid financial assets into marketable securities that can be sold to investors.

CORPORATE GOVERNANCE DEFINED

Corporate governance is viewed as “the set of rules that influence expectations about the use of control over resources of a firm.

ACCOUNTABILITY DEFINED

This is the act of being answerable and liable to an obligation.