IMPACT OF BANK-SPECIFIC FACTORS AND MACROECONOMIC VARIABLES ON NONPERFORMING LOANS OF LISTED DEPOSIT MONEY BANKS IN NIGERIA
IMPACT OF BANK-SPECIFIC FACTORS AND MACROECONOMIC VARIABLES ON NONPERFORMING LOANS OF LISTED DEPOSIT MONEY BANKS IN NIGERIA
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Date
2018-04
Authors
SAMUEL, Alaba Ademola
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Abstract
The study examines the impact of bank-specific factors (loan loss provision, capital adequacy ratio and loan to total asset ratio) and macroeconomic variables (exchange rate and crude oil prices) on nonperforming loans of listed deposit money bank in Nigeria. The study used secondary sources of data, which is panel data in nature, over the period 2006-2015. Random effect model was used to examine the determinants of nonperforming loans of listed deposit money banks in Nigeria. The study finds that loan loss provision ratio, loan to total asset ratio and crude oil prices have significant impact on the nonperforming loans of listed deposit money bank in Nigeria. The study also finds that exchange rate volatility and capital adequacy ratio have positive but not significant impact on nonperforming loans. The study concludes that loan loss provision, loan to total asset ratio and crude oil price are major determinants of nonperforming loans of listed deposit money bank in Nigeria. It recommends that bank managers should maximize portfolio in less risky assets with fixed assets, and that bank management and loan officers pay serious attention to asset quality of banks. The study also recommends that banks take special cognizance of the likely impact of falling in crude oil prices before granting loans request to customers in oil and gas sector and that government needs to formulate policies to promote greater exchange rate stability.
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A THESIS SUMMITED TO THE SCHOOL OF POSTGRADUATE STUDIES, AHMADU BELLO UNIVERSITY ZARIA, IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF SCIENCE (M.Sc.) DEGREE IN BANKING AND FINANCE
DEPARTMENT OF BUSINESS ADMINISTRATION, AHMADU BELLO UNIVERSITY BUSINESS SCHOOL,
AHMADU BELLO UNIVERSITY,
ZARIA, NIGERIA
Keywords
IMPACT,, BANK-SPECIFIC FACTORS,, MACROECONOMIC VARIABLES,, NONPERFORMING LOANS,, LISTED DEPOSIT MONEY,, BANKS IN NIGERIA,