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Deposit Money Bank Credit Delinquency and Performance Controversy in Nigeria

Michael, Chiemela Kingsley, Ejem, Chukwu Agwu, Ike, Frank Chidiebere

Abstract

This study provided empirical insights by examining both the determinants of loan defaults and the resultant effects on banks' financial performance in Nigeria. It focused on assessing the various credit policies used by the monetary authorities to insulate incessant loan delinquencies and its resultant effect on the performance of deposit money banks in Nigeria. To achieve this study, data for empirical analysis were sourced from the Nigerian deposit insurance cooperation spanning from 1990 to 2023. Error Correction Mechanism was used to estimate the model specified. It was found among others that non-performing loans (credit risks) exert significant impact on bank performance within the period of the study, while average liquidity ratio insignificantly related to bank performance within same period. The researcher recommends among others that the monetary authorities should intensify their regulatory as well as their supervisory role as it concerns the reduction of the volume of bad loans granted by banking system in Nigeria. Therefore, there is need for the Nigerian government to prioritize credit management, particularly in the deposit money banks to foster sustainable performance.

Keywords

Credit RiskLiquidity RiskReturn on AssetsECMNigeria

References

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