BANK SPECIFIC FACTORS AND ASSET QUALITY OF LISTED DEPOSIT MONEY

Abstract

This study examined the effect of bank specific factors on asset quality of listed deposit money banks in Nigeria. Asset quality was proxied by nonperforming assets whereas the independent variables include Return on Asset, Interest Income Spread, Income Diversity and Credit Growth Rate. The study used a correlation research design for which data were collected from the published annual financial reports and accounts of the studied DMBs listed in Nigeria for seven years ((2012-2018) and analyzed using multiple regression analysis with the aid of STATA software. The population consisted of the 14 listed DMBs on the Nigerian stock exchange as at 31st December, 2018, whereas as a result of applying a filter, the sample size was 13 listed DMBs. The outcome of the study revealed that ROA has a negative and significant effect on Asset Quality of listed DMBs in Nigeria. While Income Diversity and Interest Income Spread have a favorable and considerable impact on DMB Asset Quality in Nigeria. Credit Growth Rate, on the other hand, had a favorable but negligible influence on Asset Quality of Nigerian listed DMBs. The study concludes that management of listed DMBs in Nigeria should aim to balance their profit pursuit with better asset quality, based on the data. Furthermore, in order to enhance the asset quality of DMBs, the study suggests that management should always guarantee that other investments outside of their lending/financial intermediation business are kept to a minimum or not prioritized at all.