Deposit insurance fund and the quality of risk assets of Nigerian deposit money banks

Orits Frank Ebiaghan,Edirin Jeroh

doi:10.5267/j.msl.2019.10.028

Abstract

Deposit insurance fund and the quality of risk assets of Nigerian deposit money banks

Highlights

IntroductionIn the event of total collapse or failure on the part of any insured bank, depositors are promptly reimbursed where the Deposit Insurance Scheme (DIS) in place is effective and efficient
The dire consequences of the 2007/2008 financial meltdown on global economies necessitated the urgent need to institute improved sectorial reforms and policies geared towards insulating financial systems from external and internal shocks
Evidence from our analyses indicates that the volume of total deposits and total loans and advances of Deposit Money Banks (DMBs) have long run negative and statistically significant relationship with Deposit Insurance Fund (DIF)

Summary

Introduction

In the event of total collapse or failure on the part of any insured bank, depositors are promptly reimbursed where the DIS in place is effective and efficient. Alford (2010, 2012); averred that a welldesigned DIS should possess proper mechanisms to ensure the availability of sufficient funds to promptly reimburse depositors in the event of failure and defray operating expenses of the system as evidenced by the experiences of other countries. Where the existing DIS is not sufficiently funded, there might be problems relating to delays in reimbursing depositors and/or resolving the aftermaths of bank failures which certainly has grave consequence on the confidence and credibility of the system (Demirgüç-Kunt & Kane, 2002; Nijskens & Wagner, 2011)

Objectives

Results

Conclusion