Examine the Impact of Total Bad Debts on the Performance of Deposit Money Banks in Nigeria

The Impact of Debt Structure on Corporate Financial Performance: Evidence from Nigerian Banks

This study investigates The Impact of Debt Structure on Corporate Financial Performance, evidence from Nigerian Banks using panel data from five selected deposit money banks over a tenyear period (2009–2018). The study aims to assess how different forms of debt—Short-Term Debt to Total Assets (SDTA) and Long-Term Debt to Total Assets (LDTA)—affect financial performance, measured by Return on Assets (ROA). Descriptive statistics reveal that Nigerian banks are highly leveraged with short-term debt, averaging 76.4%, while long-term debt accounts for just 9% of total assets. The regression model was estimated using fixed effects, guided by the Hausman specification test. The regression results show that both SDTA (β = 0.5264, p = 0.7850) and LDTA (β = 0.0388, p = 0.5882) have positive but statistically insignificant effects on ROA. The model exhibits good explanatory power with an R-squared of 0.7766 and an F-statistic of 4.8681 (p = 0.0039), indicating overall model significance. These findings suggest that while Nigerian banks rely heavily on short-term debt financing, neither short-term nor long-term debt significantly influences profitability. Based on the findings, the study recommends that bank managers and shareholders critically evaluate their debt composition, focusing on costeffectiveness and strategic alignment. The study also encourages investors to consider the debt structure of banks as a factor influencing expected returns. Overall, the results challenge conventional theories suggesting a strong link between capital structure and performance, indicating that in the Nigerian banking context, other variables may play more dominant roles in shaping profitability.

Evaluating the Relationship Between Credit Risk and Bank Performance in Nigeria: Ardl Analytic Approach

This study investigated the relationship between the upside potentials inherent in credit risk and the performance of deposit money banks (DMBs) in Nigeria. While credit risk is traditionally perceived as a threat to banking stability, emerging evidence suggests that it can also present opportunities for enhanced profitability if effectively managed. The study obtained data from the Nigerian Deposit Insurance Corporation where credit risk proxied by the ratio of non-performing loans to total loans (NPLTL) and average liquidity ratio (ALR) as explanatory variables, whereas return on assets (a proxy of bank performance) as dependent variable, spanning from 1990 to 2023. The Autoregressive Distributed Lag (ARDL) model was employed to estimate the models. Findings indicate that the ratio of non-performing loans to total loans and advances (credit risk) significantly affects bank return on assets, a proxy for deposit money banks' performance, whereas the average liquidity ratio has no significant impact on return on assets. From the findings, Deposit money banks should adopt a dynamic credit risk management practice; flexible risk management frameworks that allow them to exploit profitable lending opportunities while controlling potential losses, among others. The study contributes to the literature on the credit risk-bank performance nexus, given the ever-changing dynamic economic environment faced by Nigerian banks.

The Impact of Bank Size on the Performance of Nigerian Deposit Money Banks

Bank size remains an important but unsettled determinant of bank performance, particularly in a financial system shaped by consolidation, digitalisation, and changing regulatory requirements. This study examined the impact of equity capital, bank size, loan assets, and deposit liabilities on the performance of selected Nigerian Deposit Money Banks, measured by return on assets. The analysis focused on five Tier-1 banks and used quarterly panel data covering 2014Q1–2024Q4, yielding 220 bank-quarter observations. Descriptive statistics, correlation analysis, conventional static panel estimators, and diagnostic tests were applied. Following evidence of heteroscedasticity, serial correlation, and cross-sectional dependence, the Panel-Corrected Standard Errors estimator was used for the principal regression analysis. The results show that equity capital has a positive and statistically significant relationship with return on assets (coefficient = 1.2312, p < 0.01). Bank size has a negative and statistically significant relationship with performance (coefficient = -4.5039, p < 0.01), while loan assets (coefficient = 1.3261, p < 0.01) and deposit liabilities (coefficient = 2.9369, p < 0.01) are positively associated with return on assets. The model explains approximately 70.35% of the variation in return on assets. The findings indicate that expansion in asset size alone is not associated with improved performance and that capital strength, credit intermediation, deposit mobilisation, and efficient resource management remain important to the performance of the sampled banks.

Examine the Impact of Capital Adequacy Ratio and How It Determines the Performance of Deposit Money Banks in Nigeria

This study examines the impact of capital adequacy ratio (CAR) on the performance of deposit money banks in Nigeria. Capital adequacy, which reflects a bank’s ability to absorb financial shocks and maintain stability, remains a critical indicator of financial soundness and regulatory compliance. The study adopts a longitudinal research design using secondary data obtained from the financial statements of eight (8) selected deposit money banks in Nigeria over a nine-year period spanning 2014–2022. The analysis employs regression techniques to evaluate the relationship between capital adequacy ratio (CAR) and bank performance, measured by Return on Equity (ROE). Findings reveal that capital adequacy ratio has a positive relationship with bank performance, with a regression coefficient of 0.058407, indicating that an increase in CAR leads to an improvement in ROE. However, the relationship is statistically insignificant, as evidenced by a p-value of 0.3346, suggesting that capital adequacy does not significantly determine the performance of deposit money banks in Nigeria within the study period. The study concludes that although higher capital adequacy enhances the capacity of banks to absorb losses and improve profitability, its effect on performance is not statistically significant. It recommends that deposit money banks strengthen their capital base while also improving credit risk management practices, ensure strict compliance with regulatory requirements such as the Banks and Other Financial Institutions Act (BOFIA) and prudential guidelines, and adopt efficient financial strategies to enhance overall performance.

Measuring the Impact of Credit Policy on the Financial Performance of the Banking Sector in Iraq

Non-Performing Loans and Profitability of Deposit Money Banks in Nigeria

This study investigates the relationship between non-performing loans (NPLs) and the profitability of deposit money banks in Nigeria, specifically focusing over a 15-year period from 2009 to 2023. The primary objective is to assess how NPLs impact the bank's profitability, with sub-objectives examining the effect of non-performing loan ratio, growth rate, and coverage ratio on return on assets (ROA). The research employs a quantitative approach, utilizing secondary data sourced from Deposit Money Banks annual reports to analyze trends and correlations. Data collection involved extracting relevant financial metrics from Deposit Money Banks annual reports, including non-performing loan figures, total loans, loan loss provisions, net income, and total assets. The study employs descriptive statistics, correlation analysis, and regression models to examine the relationships between variables. The findings reveal that while non-performing loan ratio and coverage ratio significantly influence ROA, the growth rate of non-performing loans does not show a strong correlation with profitability. The correlation and regression analyses indicate that higher non-performing loans correlate negatively with ROA, suggesting that increasing NPLS adversely affect profitability. The study recommends that Deposit Money Banks enhance its risk management strategies to mitigate the negative effects of non-performing loans on profitability. It also suggests that regulators enforce stricter guidelines for loan provisioning and risk management to safeguard financial stability. Additionally, investors are advised to carefully monitor banks' non-performing loan metrics when making investment decisions. These measures aim to improve financial performance and stability within the banking sector. This research contributes valuable insights into the dynamics of loan management and profitability in the Nigerian banking sector, offering practical recommendations for improving financial health and performance.