ABSTRACT

 Information and information technology have continued to play a vital role in the operations and performance of business entities. Banks are not left out as far as this basic requirement is concerned. The nature of the banks' business, particularly in lending, has necessitated the use of all available vital information in considering request for loans and advances. Financial statements comes in readily as tool for assessing the "health" and future of business. This study was undertaken to determine the extent to which banks in Nigeria depend on financial statements as a tool for reaching decisions or requests for loan. The researcher chose four (4) banks as case study. Interviews and questionnaires were used as methods for data collection. However, a number of constraints were experienced. Time and financial constraints were the most serious. The result of the research showed that banks always demanded financial statements when considering requests for credit. However, it was also revealed that financial statement was not a top priority amongst all the factors that influence lending decisions. Other very influential factors are personality of the prime mover, his integrity, the viability of the proposed project and evidence of ability to repay a loan. From t11e outcome of the researcher and following the existing lending practice, the researcher made some recommendations. One of them is that banks should continue to insist on financial statements and information for all credit applications. Such financial statements should be expertly analyzed and the result used or allowed to influence lending decisions significantly. Qualified financial analysts should be engaged as financial statement is needed to monitor lending for the period of credit. Also, it was recommended that management accounting be extensively used both by the bank and the borrowers to ensure that both parties act proactively when there is need.