The study examined the effect of Non-Performing Loans on the financial performance of commercial banks in Nigeria between the periods of 1985 to 2016. The study employed the multiple regression techniques to analyze data collated from the Central Bank of Nigeria (CBN) statistical bulletin and Nigeria Deposit Insurance Corporation (NDIC) publications for various years. The result of the study shows that Non-Performing Loans to Total Loans ratio (NPL/TLR) and Cash Reserve Ratio (CRR) had statistically negative significant effect on Return on Asset (ROA). These result shows that a high level of non-performing loans would reduce the financial performance of commercial banks in Nigeria. Consequently, the study recommends that the regulatory authorities in Nigeria should create and support an environment where commercial banks in Nigeria can have a strong risk management practices.
Acho, F. T., & Tegnuh, N. C. (2008), Bank Performance and Credit Risk Management, Master Degree Project School of Technology and Society, University of Skovde Press.
Ahmad, F., & Bashir, T. (2013). Explanatory power of bank specific variables as determinants of NPLs: Evidence form Pakistan banking sector. World Applied Sciences Journal, 22(9), 1220–1231.
Ahmad, N.H. and Ariff, M. (2007).Multi-country Study of Bank Credit Risk Determinants, International Journal of Banking and Finance, 5(1), 135-152.
Athanasoglou, P. P., Brissimis, S. N., & Delis, M. D. (2008). Bank-specific, industry-specific and macroeconomic determinants of bank profitability, Journal of International Financial Markets, Institutions and Money, 18(2), 121-136.
Bofondi, M. & Gobbi, G. (2003). Bad Loans and Entry in Local Credit Markets. Rome: Bank of ItalyResearch Department.
Buncic, D. and Melecky, M. (2012). Macro prudential Stress Testing of Credit Risk – A Practical Approach for Policy Makers. World Bank Policy Research Working Paper No. 5936
Central Bank of Nigeria (CBN) 2010 Prudential Guidelines for Deposit Money Banks in Nigeria.
Central Bank of Nigeria (CBN) 2016 Prudential Guidelines for Deposit Money Banks in Nigeria.
Dornbusch, R., & Fischer, S. (1990). Macroeconomics. (5th ed.). McGraw-Hill, Inc.
Ekanayake, E.M. N.N. and Azeez A.A., (2015) Determinants of Non- Performing Loans in Licensed Commercial Banks: Evidence from Sri Lank. Asian Economic and Financial Review 5 (6) 868-882
Farhan, M, Sattar, A, Chaudhry, A,H, Khalil, F. (2012) Economic Determinants of Non-Performing Loans: Perception of Pakistani Bankers, European Journal of Business Management volume 5 pp 11-22
Golin, J. (2001). The Bank Credit Analysis Handbook: A Guide for Analysts, Bankers and Investors. John Wiley & Sons (Asia).
Hou, Y & Dickinson, D.(2007). “The Non-Performing Loans: Some Bank-level Evidences,Research Conference on Safety and Efficiency of the Financial System.
Joseph and Okike (2015) the impact of non-performing loans on firm profitability: A focus on the Nigerian Banking industry. American Research Journal of business and management ISSN 2379-1047 volume 1.
Klein, N. (2013). Non-Performing Loans in CESEE: Determinants and Impact on Macroeconomic Performance, IMF Working Paper, WP/13/72.
Klein, N. (2014). Non-Performing Loans in CESEE:Determinants and Impact on Macroeconomic Performance. Journal of Banking and Finance, 234-249.
Lydnon, Peter and Ebitare (2016) the impact of non-performing loans and bank performance in Nigeria. International Journal of Humanities and Social Science invention. ISSN 2319-7722 volume 5.
Meltzer, A. H. (2003), A History of the Federal Reserve, Chicago, University of Chicago Press, 1, 1913- 1951.
Mohd Z., A. Karim, Sok-Gee, C., and Sallahundin, H., 2010. “Bank Efficiency and Non-Performing Loans: Evidence from Malaysia and Singapore”, Prague Economic Papers, Issue 2, Pages 118-132.
Muhammad F. Ammara S. Abrar, H.C, and Fareeha, K. (2012) Economic Determinants of Non- Performing Loans: Perception of Pakistan Bankers. European Journal of Business and Management 4 (19) 87-99
Muriithi, M.W. (2013) Causes of nonperforming loans in commercial banks in Kenya. University of Nairobi.
Mwangi, J. (2014). The Relationship Between the Level of Non-Performimg Loans and the Financial Performance of Commercial Banks in Kenya. Journal of Banking and Finance, 1 (2) 17-23.
Nigeria Deposit Insurance Corporation (NDIC) 2013 Annual Report and Statement of Account
Nigeria Deposit Insurance Corporation (NDIC) 2016 Annual Report and Statement of Account
Nkusu, M. (2011), Nonperforming Loans and Macrofinancial Vulnerabilities in Advanced Economies, IMF Working Paper WP/11/161.
Olusanya, S. O., Oluwatosin, O. A., & Chukwuemeka, O. E. (2012), Determinants of Lending Behaviour Of Commercial Banks: Evidence From Nigeria, A Co-Integration Analysis (1975-2010) IOSR Journal Of Humanities and Social Science (JHSS) ISSN: 2279-0837, ISBN: 2279-0845. 5(5), 71-80.
Richard, E. (2011). “Factors That Cause Non-Performing Loans in Commercial Banks in Tanzania and Strategies To Solve Them”, Journal of Management Policy and Practice. Vol. 12, No. 7, pp. 50 – 57.
Rose, P., & Hudgins, S, (2008), Bank management & financial services. (7th ed). Macgraw-hill.
Somoye, R.O.C. (2010). The Variation of Risks on Non-Performing Loans on Banks Performances in Nigeria. Indian Journal of Economics & Business, Vol. 9, No. 1, 87-99.
Waweru, N. M., & Kalani, V. M. (2016). Commercial Banks Crises in Kenya:Causes and Remedies. African Journal of Accounting, Economics, Finance and Banking Research, 12-33.
This work is licensed under a Creative Commons Attribution 4.0 International License.