BANK SPECIFIC DETERMINANTS OF NON-PERFORMING LOANS IN NIGERIAN COMMERCIAL BANKS
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Date
2019
Journal Title
Journal ISSN
Volume Title
Publisher
Nigerian Journal of Banking and Financial Issues
Abstract
This study investigated the bank specific determinants of non-performing loans (NPLs) in the Nigerian commercial banks. The study employed a cross sectional time series data covering a period of eleven years (2006 to 2016). The study applied GMM technique based on a panel set from fifteen commercial banks in Nigeria. The findings from the whole sample estimation revealed a significant relationship between NPLs and bank specific factors of NPLst-1, loan to deposit ratio, banks size ratio, bank performance ratio (ROE), credit growth ratio as well as control factor of global financial crisis in Nigeria. Also, the sub-sampled estimation, showed that the effect of lag of NPLs, bank performance ratio (ROE), credit growth ratio and control factor of global financial crisis were significant across the various categories of commercial banks in Nigeria. The study hence, recommends among others that Central Bank of Nigeria (CBN) should come up with a monitoring mechanism or framework to guide against the policy of setting unattainable profit targets by commercial banks and also, that management of commercial banks in Nigeria should lay emphases on the magnitude of last period NPLs before granting new loans. In conclusion, the study ascertained that the effects of bank specific factors on NPLs vary across different categories of commercial banks in Nigeria.