Open AccessAsset Quality and Deposit Money Banks Performance in Nigeria
Publication year - 2019
Publication title -
american international journal of business and management studies
Language(s) - English
Resource type - Journals
eISSN - 2641-4953
pISSN - 2641-4937
DOI - 10.46545/aijbms.v1i1.112
Subject(s) - asset quality , return on assets , loan , asset (computer security) , business , financial system , non performing asset , demand deposit , finance , economics , monetary economics , monetary policy , capital adequacy ratio , capital asset pricing model , profit (economics) , computer science , computer security , profitability index , microeconomics
This study investigate the relationship between asset quality and deposit money banks performance in Nigeria over a period of 30 years ranging from 1986 to 2016, utilizing time series data collected from the Nigeria deposit insurance corporation annual reports and accounts, CBN financial stability report and CBN statistically bulletin for various years. The variables of study includes return on asset (ROA) proxy for Deposit Money Bank performance in Nigeria, ratio of non-performing loan to total loan (NPL), ratio of liquid assets to total assets (LAT) and ratio of liquid assets to short term liabilities (LAS) as measures of asset quality. The study utilizes both the descriptive and econometric techniques to analyze the time series data. The result shows that there is a short run relationship between asset quality and deposit money bank performance in Nigeria. Also, the co-integration result reveals the presence of a long run relationship between asset quality and deposit money bank performance in Nigeria while the granger causality result shows evidence of causality between asset quality and deposit money bank performance in Nigeria. Based on this we conclude by saying that maintaining sound assets quality position is critical to the long term performance, survival and sustainability of DMBs in Nigeria.