LOAN PORTFOLIO QUALITY AND EFFICIENCY OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA

LOAN PORTFOLIO QUALITY
AND EEFICIENCY OF QUOTED
DEPOSIT MONEYBANKS IN
NIGERIA
GABRIEL, Femi Goodwill
Department of Accounting, University of
Calabar, Nigeria
&
Idaka Sunday Egbe
Department of Accounting, University of
Calabar, Nigeria
ABSTRACT
Banking world over is adjusting to
profound changes following the backdrop
of current economic downturn with its
significant impact on global financial
outlook. In the face of coronavirus
diseases 2019 (covid 19) pandemic, most
entities including Banks are experiencing
general economic conditions associated
with financial market volatility and
erosion, deteriorating credits and loan
portfolio, liquidity concerns, further
increases in government intervention,
increasing unemployment and layoffs,
broad declines in consumer discretionary
spending, increasing inventory levels, and
general reductions in production because
of decreased demand. This study
investigates loan portfolio quality and
efficiency of Quoted Deposit Money Banks
(DMBs) in Nigeria amidst these
phenomena. The population of the study
consists of all the quoted Deposit Money
Banks in Nigeria with sample of selected 8
surviving Deposit Money Banks with
international authorization in Nigeria as at
December, 2019. using data envelopment
analysis. The findings of the study reveal
that the percentage value of loan portfolio
at risk (VaR) and compliance level to
prudential provisioning has negative effect
Accounting and Finance Research Association
on the efficiency of Quoted Deposit
Money
banks
in
Nigeria.
while
Management response to early warning
triggers of non-performing loan has a
significant positive impact on efficiency
but capital adequacy does not in any way
determine how efficient Quoted Deposit
Money Banks in Nigeria are performing.
The study, therefore, recommends that,
the management of Quoted Deposit
Money Banks in Nigeria should intensify
efforts in monitoring their loan portfolio
and put in place adjustable risk coverage
mechanism for safeguarding the asset
quality. The managements of the banks
are also advised to strengthen internal
credit policies that will screen out
potential bad loans and build a healthy
and recoverable loan portfolio.
Keywords: Loan portfolio quality, Bank
efficiency, Value at risk and Deposit
Money Banks

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