DETERMINANTS OF NON-PERFORMING LOANS IN MONEY BANKS IN NIGERIA
Abstract
The study examines the Determinants of Non-Performing Loans in Deposit Money Banks in Nigeria. Other specific objectives of the study are to examine the impact of lending rate on non-performing loans in the deposit money banks in Nigeria, ascertain the extent to which inflation rate has contributed to Non-performing loans in deposit money banks in Nigeria, examine the impact of capital adequacy ratio on Non-performing loans in deposit money banks in Nigeria and examine the relationship between total loans and Non-performing loans in deposit money banks in Nigeria. The study employed the ordinary least squares multiple regression analysis for the period of 32 years. The data was sourced from the Central Bank of Nigeria Statistical Bulletin of 2022. The findings of the study are that capital adequacy ratio has a positive and not statistically significant impact on non-performing loans (NPL) in the long run. Inflation rate has a positive and not statistically significant impact on NPL in the long-run, lending rate has a negative and not statistically significant impact on NPL in the long-run. This means that lending rate does not have significant impact on NPL and total loan has a positive and statistically significant impact on NPL. A major recommendation of the study is that inflation rate should be given more attention so as to reduce the incidence of non-performing loans in the deposit money banks in Nigeria.
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