Discriminant analysis of Nigerian banks financial condition

Jonathan Njoku and Eno L. Inanga

International Journal of Economics and Accounting, 2012, vol. 3, issue 2, 165-195

Abstract: This paper aims to develop a discriminant model that depicts bank financial condition in Nigeria. An earlier paper suggests ANATOMY model of bank financial condition as viable upgrade of the CAMELS framework that bank supervisors use (Njoku, 2011). Within the ANATOMY framework, the study determined that market power, deposit mobilisation, capital confidence and market presence (or earnings) shape a discriminant model to successfully classify strong, normal and weak banks. It, therefore, contributes a model that bank supervisors, auditors and industry watchers can use to gauge the financial condition of a bank operating in Nigeria. The insight also suggests that bank strategy, corporate governance and regulatory measures may be built around market power, deposit mobilisation, capital confidence and market presence (or earnings) to enhance effectiveness.

Keywords: discriminant models; bank anatomy; bank financial condition; market power; deposit mobilisation; capital confidence; market presence; Nigerian banking; Nigeria; bank classification; normal banks; weak banks; strong banks; bank strategy; corporate governance; regulatory measures. (search for similar items in EconPapers)
Date: 2012
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