Commercial Banks‟ Pricing of Loans, Assets Quality and Financial Intermediation in Nigeria
- Project Research
- 1-5 Chapters
- Abstract : Available
- Table of Content: Available
- Reference Style: APA
- Recommended for : Student Researchers
- NGN 5000
Abstract
Despite the interest rate liberalization policy that gave rise to commercial banks’ pricing of loans models which is expected to enhance quality of banks assets and improve financial intermediation, poor assets quality of banks, bank failures and poor intermediation role of banks are still prevalent in Nigeria. Therefore, the focus of this study is to estimate commercial banks’ pricing of loans model and use the model to evaluate assets quality of banks and level of financial intermediation in Nigeria since the financial liberalization reforms of 1986 - 2002. Based on a sample of nine Deposits Money Banks (DMBs) with data sourced from their annual balance sheet and income statements of accounts from 2002 – 2016, the study used one-way fixed effect Least Squares Dummy Variable (LSDV) model to estimate the banks’ pricing of loans model. The estimated LSDV parsimonious model revealed R2 of 0.60 for the ‘low risk’ credit market. Most significant is the revelation that the coefficient of the credit risk variable is significantly negative in the ‘low risk’ and ‘high risk’ credit markets, contrary to the a priori theoretical expectation. This finding shows that the DMBs underprice credit risk to ‘buy’ market share in the spirit of relationship banking with support from non-interest income (fee–based products) that evolved due to product innovations brought about by financial liberalization. These attitudes of the DMBs are in response to stiff competition provoked by financial liberalization which has adverse consequences for assets quality of banks that deteriorated and successively led to bank failures, high cost banks bailouts and low level of financial intermediation, with financial disintermediation and ‘inverted intermediation’ militating against economic growth. This study, therefore, recommends that Central Bank of Nigeria (CBN) should up-step its focus on prudential regulations with greater emphasis to macro-prudential regulations to enhance assets quality of banks, reduce bank failures and improve financial intermediation for economic growth.
Related Project Materials
Implementation of a DNA Sequence Alignment Algorithm for Forensic Science: A Case Study of Bayero University, Kano State
Background of the Study
DNA sequence alignment is a fundamental tool in forensic science, critical for identifying individu...
IMPACT OF EXCHANGE RATE ON BALANCE OF PAYMENT IN NIGERIA
Abstract
This study empirically investigates the impact of exchange rate on the Nigeria External sector...
The Effect of Continuous Nursing Education on the Management of Hypertension in Obafemi Awolowo University Teaching Hospital, Ile-Ife
Background of the Study
Hypertension remains one of the most prevalent non-communicable diseases worl...
An assessment of digital inequalities and their impact on access to online education in rural secondary schools in Kebbi Central LGA, Kebbi State
Background of the Study
Digital inequalities refer to the disparities in access to, and use of, digital technologies among different popu...
APPLICATION OF RESPONSIBILITY ACCOUNTING IN IMPROVING ACCOUNTABILITY IN LOCAL GOVERNMENT ADMINISTRATION: A STUDY OF DASS LGA
Background of the Study
Responsibility accounting is a system of accounting that assigns accountability...
The Role of Development Journalism in Enhancing Water Sanitation Awareness in Lafia North LGA, Nasarawa State
Chapter One: Introduction
1.1 Background of the Study
Access to clean water and adequate sanitat...
An Evaluation of Nurses' Knowledge and Practice of Holistic Nursing Care in Palliative Settings at Federal Medical Centre, Makurdi
Background of the Study
Holistic nursing care is an approach to nursing practice that addresses the physical, emotional,...
The Impact of Road Maintenance Costs on Transportation Businesses: Evidence from Kogi State
Background of the Study
The transportation sector is vital to Nigeria’s economy, facilitating the movement of good...
An Examination of the Role of Nostalgia in Product Branding: A Study of Nestlé Nigeria in Taraba State
Background of the Study
Nostalgia marketing is a strategy that taps into consumers’ memories and emotional connect...
Design and Implementation of IoT‐Based Smart Solar-Powered Traffic Lights in Dutse LGA, Jigawa State
Background of the study:
Urban traffic management is critical to ensuring road safety and reducing congestion, yet conventi...
