NON-PERFORMING LOANS AND THE PERFORMANCE OF DEVELOPMENT FINANCE INSTITUTIONS (DFIS) IN NIGERIA: A CASE OF BANK OF AGRICULTURE (BOA) PERFORMANCE IN SOUTH EASTERN ZONE, 2007-2019

NON-PERFORMING LOANS
AND THE PERFORMANCE OF
DEVELOPMENT FINANCE
INSTITUTIONS (DFIS) IN
NIGERIA: A CASE OF BANK OF
AGRICULTURE (BOA)
PERFORMANCE IN SOUTH
EASTERN ZONE, 2007-2019
Chinwe Okafor
Department Of Banking And Finance
University of Nigeria, Enugu Campus
chiterese@gmail.com
ABSTRACT
The objective of this study is to investigate
how Non-Performing Loans affect the
operational performance of DFIs in Nigeria.
The study was conducted using Bank of
Agriculture in South Eastern Geopolitical
Zone as a case study. It was guided by one
independent variable (Nonperforming Loans)
with Operational Performance (interest
income, strength of beneficiaries, lending
capacity and repayment rate) as the
dependent variable. Quantitative secondary
data from the Bank of Agriculture (BOA)
quarterly reports over the period 2007-2019
was used to carry out the study. Findings of
this study reveal that increase in Non-
Performing Loans negatively and significantly
affect the performance of DFIs. Healthy loan
portfolios are therefore vital for DFIs in view
of their impact on the key performance
indicators of DFIs. It is recommended that
financial institutions particularly DFIs should
always carry out adequate credit risk analysis
before granting loans. Also, they should
formulate and implement appropriate
strategies to mitigate non-performing loans.

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