Loans Default and Return on Assets (Roa) In the Nigerian Banking System

Olawunmi Omitogun, Deji Olanrewaju and Yimka S. A. Alalade
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Olawunmi Omitogun: Department of Economics, Olabisi Onabanjo University, Ago-Iwoye, Ogun, Nigeria
Deji Olanrewaju: School of Law and Security Studies, Babcock University, Ilishan Remo, Ogun State, Nigeria
Yimka S. A. Alalade: Department of Banking and Finance School of Management Sciences College of Management and Social Sciences Babcock University, Ilishan Remo, Ogun State, Nigeria

International Journal of Economics and Financial Research, 2016, vol. 2, issue 4, 65-73

Abstract: This study investigated loans default (problems loans) and returns on assets in Nigeria banks, employing the data of five banks for a period of five years (2010-2014), using the ordinary least squares (OLS) regression techniques to check the relationship between problem loans and returns on assets (ROA). The findings shows that a positive and significant relationship at 5% level of significance exist between problem loans and returns on assets, and a negative and significant relationship at 10% level of significance exists between loans and advances and returns on assets in Nigerian banks. A major suggestion is that banks in Nigeria should enhance their capacity in credit analysis and loan administration, while the regulatory authority should pay more attention to banks’ compliance to relevant provisions of Bank and other Financial Institutions Act (1991) and prudential guidelines.Â

Keywords: Loans Default; Problem Loans; Asset Management; Credit Analysis; Financial Intermediation. (search for similar items in EconPapers)
Date: 2016
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