PRICING OF FINANCIAL PRODUCTS AND SERVICES IN THE NIGERIAN BANKING INDUSTRY: A CASE STUDY OF AFRICAN INTERNATIONAL BANK LTD
PRICING OF FINANCIAL PRODUCTS AND SERVICES IN THE NIGERIAN BANKING INDUSTRY: A CASE STUDY OF AFRICAN INTERNATIONAL BANK LTD
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Date
1999-09
Authors
Hassan, Mohammed Bello
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Abstract
The study titled pricing of financial and services a case study of
African International Bank Limited is justified by the realization that
pricing is less developed in the Nigeria banking industry compared to
other aspects such as credit analysis or legal documentation.
The reason for this was traced to the fact that in highly deregulated
financial market the prices of almost all financial products and
services as set by the regulatory bodies such as the CBN .
The inefficiencies of price controls has led to deregulation and banks
are free to set many prices of their products and services.
The objective of the study is to allow more flexibility in pricing and
increased profitability through superior pricing of bank products and
services.
The study took a broad look at pricing in the African International
Bank Limited. In doing that primary data was acquired though inter
personal interviews with some of the management staff of the bank
and the secondary data was obtained from a review of relevant
literature.
The study found that commercial banks are in strict adherence to
provisions of the bankers tariff which allows them little room to
develop a systematic approach to pricing. The only evidence of
deregulation and consequently some degree of systematic pricing is
in the area as interest rate. Even here the pricing mechanisms are
not fully developed.
The following recommendations were made.
Loan terms should reflect the borrowers contribution to the
banks over all risk.
Banks should identify and offer fixed rates to those firms whose
cash flow as relatively fixed in nominal terms.
Banks should use the customer profitability model in assessing and
pricing loans; as well as ensuring that adequate strategies are put in
place for business accounts on one hand and customer accounts on
the other.
Banks should also adopt a split rate pricing scheme so as to improve
profit and simultaneously maintain customer incentive to hold large
balance.
The CBN should also abolish the use as the Bankers tariffs.
Description
A Project Submitted To The Department Of Business
Administration, Faculty Of Administration In Partial Fulfillment
Of The Requirements for The Award Of The Degree Of Master
Of Business Administration (M.B.A) Of The Ahmadu Bello
University Zaria Nigeria
DEPARTMENT OF BUSINESS ADMINISTRATION
AHMADU BELLO UNIVERSITY
Keywords
PRICING,, FINANCIAL,, PRODUCTS,, SERVICES,, NIGERIAN,, BANKING INDUSTRY,, CASE STUDY,, AFRICAN INTERNATIONAL BANK