DETERMINANTS OF NON-PERFORMING LOANS IN THE NIGERIA BANKING INDUSTRY

Abstract

This study examined the determinants of non-performing loans (NPLs) in the Nigeria banking industry between the periods of 2011-2020. The specific objective of the study is to examine the relationship between the measures of bank specific variables [Bank Size (BS), Capital Adequacy (CA), Profitability (PROF), Bank Age (BA), Liquidity (LIQ) and Loan to Total Assets (LTA)] and [NPLs proxy with Non Performing Loans Ratio (NPLR)] in Nigeria. The focus on the banks in Nigeria listed in the Nigeria Stock Exchange and the difficulty in assessing their annual reports and account of 10 banks were drawn out of the 18 deposit money banks (DMBs) for the study. The data for the study was gotten from the annual reports and accounts of the ten (10) banks on the basis of the variables under study and the data was analyzed using descriptive statistics, correlation and multiple regression analysis. The findings revealed that BS, CA and BA have significant effect on NPLR but the effect of BS and BA on NPR are negative while PROF have negative insignificant effect on NPLR of DMBs in Nigeria. This research found that determinants of NPLs have mix effect on NPLR in Nigeria. The findings suggested that BS in relation to total assets should put in consideration when granting loans and also, the DMBs in Nigeria should maintain and implement the capital adequacy policy enacted by the CBN.
 Keywords: Non-Performing Loans, Bank Size, Capital Adequacy, Profitability, Bank Age, and Liquidity.