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Management Science Letters

ISSN 1923-9343 (Online) - ISSN 1923-9335 (Print)
Quarterly Publication
Volume 10 Issue 5 pp. 1129-1140 , 2020

Deposit insurance fund and the quality of risk assets of Nigerian deposit money banks Pages 1129-1140 Right click to download the paper Download PDF

Authors: Orits Frank Ebiaghan, Edirin Jeroh

DOI: 10.5267/j.msl.2019.10.028

Keywords: Non-Performing Loans, Bank Deposits, Target Reserve Ratio, Asset quality, ARDL, VECM, Nigeria

Abstract: This paper empirically assesses the relationship between Deposit Insurance Funds (DIF) and the quality of risk assets of listed Deposit Money Banks (DMBs) in Nigeria. The entire fifteen listed DMBs in the country as of 31st December, 2017 were focused on and the secondary data were subsequently sourced from the yearly financials of the Nigeria Deposit Insurance Corporation (NDIC) for a 29-year period covering from 1989 to 2017. The Auto-Regressive Distributed Lag (ARDL) and the Vector Error Correction (VEC) estimation techniques were the basis of estimating the relationship between the variables of interest in this study. Evidence from our analyses indicates that the volume of total deposits and total loans and advances of DMBs have long run negative and statistically significant relationship with DIF. Conversely, the quality of risk assets of DMBs exhibits a positive and insignificant relationship with the target reserve ratio of DMBs. The study thus recommends that regulatory agencies in the banking sector (CBN and NDIC), amongst others, collaborate with listed DMBs to diversify and manage their risk assets by strategically intensifying the implementation of existing measures aimed at minimising incidences of loan default and the alarming levels of non-performing loans in the portfolio of Nigerian DMBs.


How to cite this paper
Ebiaghan, O & Jeroh, E. (2020). Deposit insurance fund and the quality of risk assets of Nigerian deposit money banks.Management Science Letters , 10(5), 1129-1140.

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Journal: Management Science Letters | Year: 2020 | Volume: 10 | Issue: 5 | Views: 1629 | Reviews: 0

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