Impact Of Accounting Information On Bank Lending Decisions (Case Study Of First Bank Nigeria Plc)

ABSTRACT

A great deal of useful information comes from accounting functions as it provides data which when processed, serves as useful information to the management in its planning process.  The information provided by the accounting functions serves as an important and effective tool  in bank  lending decisions because it provides  a picture  of the performance (income statement) of an organization and its current financial position (balance sheet). Such accounting information as may be contained in the financials of a borrowing firm includes cash balance, profit level and monetary value of assets which can be used as collaterals.  The purpose of this paper is to examine the impact of accounting information system on bank lending decisions (a case study of First Bank Nigeria Plc). The data collected were analysed using the product moment correlation coefficient (PMCC) technique. The result suggests that accounting information (proxied by profit margin, returns on equity and returns on assets) has a significant relationship on bank lending decisions (proxied by loan and advances). The implication of this result is a policy shift on the part of the government towards adequate financial reporting amongst firms in Nigeria,  by ensuring external auditors and audit  committees of borrowing firms comply with government regulations as it affects financial reporting.