Bank-Specific Asset Quality and Return on Asset in Selected Nigerian Deposit Money Banks

Oluseyi Abraham Olayinka ()
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Oluseyi Abraham Olayinka: Department of Management & Accounting, Postal: Lead City University, Ibadan, Nigeria,, https://www.afarng.org/jfafi/

Journal of Forensic Accounting & Fraud Investigation (JFAFI), 2022, vol. 7, issue 1, 101-119

Abstract: The banking industry has witnessed several changes in the last decade from partial to full digital transformation which improved customer engagement, especially in the area of granting loans with implications on their profitability. The loan being given to the customers enhance their economic performance leading to the sustainable growth of Nigeria economy. This study investigated the effect of asset quality on the return on assets of selected Deposit Money Banks (DMBs) in Nigeria. The study was anchored on Liabilities Management Theory. The study adopted an ex-post facto design which entails the utilization of historical data to forecast future trends. Inferential statistics adopted econometrics models with panel data using pooled ordinary least squares. The population comprises twenty-three (23) DMBs in Nigeria. The sample size consisted of seven (7) banks based on the purposive sampling method. The results revealed that asset quality has a significant effect on return on assets. It was therefore recommended amongst others that banks should review their credit policy regularly that will reduce non-performing loans and the DMBs should also re-strategize their policy on deposit mobilization that will minimize the impact of Payment Service Banks (PSBs).

Keywords: Asset quality; Deposit money banks; Return on assets; Loans; Profitability (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:ris:jfaafi:0059

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