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Determinants of nonperforming loans after recapitalization in the Nigerian banking industry: Does efficiency matter?
Author(s) -
Bolarinwa Segun Thompson,
Akinyele Olawale,
Vo Xuan Vinh
Publication year - 2021
Publication title -
managerial and decision economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.288
H-Index - 51
eISSN - 1099-1468
pISSN - 0143-6570
DOI - 10.1002/mde.3323
Subject(s) - recapitalization , non performing loan , business , profitability index , financial system , economics , monetary economics , finance , loan
We examine the intertemporal relationship between nonperforming loans, efficiency and bank recapitalization in the Nigerian banking industry between 2011 and 2018. Using system generalized method of moments (SGMM) and stochastic frontier analysis (SFA), we document the importance of bank efficiency for addressing escalating nonperforming loans in the industry after recapitalization policies and the channels pass‐through between efficiency and the nonperforming loans‐recapitalization nexus. Our results validate the roles of firm‐level and macroeconomic variables: bank size, efficiency, profitability, capitalization, economic growth, inflation, and money supply for addressing nonperforming loans. Also, efficiency passes through recapitalization and bank size to address nonperforming loans. We recommend prudential policies for managerial and profit efficiency and lend supports for CBN's new round of recapitalization policy to address escalating nonperforming loans in the industry.