Asset Quality and Deposit Money Bank Performance in Nigeria

Abstract

The banking industry globally plays a vital role in social and economic activities development of any economy through loan extension to investors. The banking industry in Nigeria has been plagued with problems of high level of non-performing loan, untraceable insider loans and challenges of poor assets quality management, thus reduced aggregate financial performance in terms of return on equity, profit after tax, return on assets and market value. The study therefore examines the effect of assets quality on Deposit Money Banks Performance in Nigeria. The research design employed was ex-post facto research design. The study population comprises of the 16 deposit money bank quoted in the Nigerian Stock Exchange over a period of 10 years ranging from 2009 to 2018. A sample size of 10 leading quoted deposit money banks was selected and purposive sampling technique was employed. The findings revealed that assets quality measures significantly effect on assets of selected quoted deposit money banks in Nigeria (Adjusted R2 = 0.28, F-statistics = 6.56 .:p = 0.00<0.05The study concluded that assets quality measures significantly affect performance components in terms of return on assets deposit money banks in Nigeria. Therefore the study recommended that deposit money banks in Nigeria should embraced credit risk identification, measurement, monitoring and controlling, and customers credit screening in order to achieve sound assets quality thus reduced the rate of non-performing loans and increase aggregate financial performance measures.