ARCHIVES
VOL. 5, ISSUE 3 (2023)
Banking industry specific and macroeconomic determinants of non performing loans in Nigeria
Authors
Rayyanu Abdulkarim Kaita, Abubakar Ibrahim Mairiga, Sa’adatu Almustapha
Abstract
This study examined the
specific and macroeconomic factors that cause non-performing loans in Nigerian deposit
money banks. A sample of 18 deposit money banks out of the 32 listed on the flow
of Nigerian Stock Exchange were selected on cross sectional basis. The study employed
non-survey research design and secondary data was used generated from the Banks’s
annual reports and accounts, Central Bank of Nigeria and Nigerian Stock Exchange
Facts Book. the data generated was analyzed using three techniques of analysis;
Descriptive Statistics, Correlation analysis and Multiple regression analysis. The
findings revealed that Return on Assets Ratio of the banks (ROA) has a positive
and significant influence on NPLs in Nigeria. Loans to Deposit Ratio (LDR) and Capital
Adequacy Ratio on the other hand were found to have a negative and significant effect
on NPLs in the Nigerian banking sector. Meanwhile, the finding revealed that, Average
Lending Rate (AVLR) has a positive and significant impact on NPLs. The study in
line with its findings, concludes objectively the significant influence of the above
variables on NPLs in the Nigerian banking sector. The study also concludes in line
with its theoretical underpinnings and the methodology adopted that, proper management
of the aforementioned factors (variables) reduces the rate of NPLs in the banking
industry. In line with the findings, the study recommends for effective and efficient
management of non-performing loans to achieve soundness and growth in Nigeria’s
banking sector.
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Pages:1-8
How to cite this article:
Rayyanu Abdulkarim Kaita, Abubakar Ibrahim Mairiga, Sa’adatu Almustapha "Banking industry specific and macroeconomic determinants of non performing loans in Nigeria". International Journal of Commerce and Economics, Vol 5, Issue 3, 2023, Pages 1-8
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