Record Details

The Effects of Bank Distress on the Nigerian Economy

International Journal of Finance & Banking Studies

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Title The Effects of Bank Distress on the Nigerian Economy
 
Creator Adeyefa, Ademola Felix; Adekunle Ajasin University, Akungba-Akoko.
Obamuyi, Marshal Tomola
Kayode, Olawale Femi
Owoputi, James Ayodele
 
Subject —
capital adequacy, asset quality, financial intermediation, ratio of non-performing loan to total loans, economic growth.
 
Description Bank distress poses threats to financial intermediation process with serious detrimental effect on the economy. Despite all attempts made by the supervisory authorities, the problem appears to defy already established approach and the menace still continues to resurface. Hence, the need to investigate the effects of bank distress on the Nigerian economy. The cointegration and error correction mechanism were used to test the data which covers a period of thirty-one  (31) years from 1982 to 2012. The research findings revealed that the ratio of non-performing loans to total loans, and total loans and advances have significant negative effect on economic growth with p-values of 0.0240 and 0.0445 respectively. Also, total bank deposit and cash reserve ratio have significant positive effect on economic growth with p-values of 0.0020 and 0.0374 respectively. The implication of this result is that the Nigerian economy is significantly affected by bank distress. The paper suggests that careful evaluation of loan proposals should always be carried out by banks to determine the viability of the projects and the repayment of the principal sum and its interest ensured to prevent weak asset quality. 
 
Publisher SSBFNET
 
Contributor —
 
Date 2015-09-21
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/450
 
Source International Journal of Finance & Banking Studies (ISSN: 2147- 4486); Vol 4, No 3 (2015): July; 57-68
2147-4486
 
Language eng
 
Relation http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/450/425
 
Rights Copyright (c) 2015 International Journal of Finance & Banking Studies (ISSN: 2147- 4486)
http://creativecommons.org/licenses/by/4.0