Improving Credit Evaluation For Nigerian Manufacturing Sector Using Analytical Hierarchy Process (Ahp)

ABSTRACT

 Analytical Hierarchy Process was applied in this study to reduce time used in the appraising credit request from Nigerian manufacturing sectors by banks. The major factors/criteria weighed include financial structure of the firm, managerial structure of the firm, sales & marketing structure, sectorial structure, company's ethics and character, and collateral. Result shows that company morality & character has the highest local weight of 32% followed by managerial structure (2 1%), financial structure (18%), collateral (13%). sectorial structure (9%) while sales & marketing structure has the lowest local weight of 7%. Thus, in the evaluation of credit repayment potential of any manufacturing firm in Nigeria, credit analyst should assign maximum time for assessing the morality and character of the company while the minimum time should be spent on sales and marketing structure of the requesting company. This method was found to reduce the turnaround time (TAT) of credit evaluation by approximately 30% with reduction in the creation of non-performing loan. The consistency of judgement is calculated to be 5% which is within the tolerance level of 10%.