An analysis of determinants of deposit money banks lending in Nigeria, 1990-2014
Deposit money banks thrives on financial intermediation. Funds lending constitutes the largest income-earning asset in the portfolio of most deposit money banks generally. Hence, banks deploy huge resources to estimate, monitor and manage the quality of their loans and advances. This study aims at investigating the determinants of lending of deposit money banks in Nigeria. Secondary data was used to justify the relationship between commercial banks and lending in Nigeria. More so, the model used was estimated using Nigeria deposit money banks loans and advances (LOA) as dependent variable, and determinants (independent variables) such as volume of deposit (Vd), Interest rate (Ir), liquidity ratio (Lr) and annual average exchange rate (ExR) for the period of 1990 - 2014 (25 years). The techniques used in this investigation were : Augmented Dickey-fuller (ADF) test), multiple regression analysis and Granger causality test. The estimated result revealed that there is a positive relationship between loans and advances and volume of deposit and annual average exchange rate of Naira to dollar, while interest rate and liquidity ratio has a negative relation: all conform to the approri expectation. The study then suggests that commercial banks should focus on mobilizing more deposits as this will enhance their lending performance, and should formulate critical, realistic and functional plans that will ensure its profitability, liquidity and solvency. The government should ensure it uses monetary policy such that will create enabling environment for the deposit money banks to generate more deposits so as to channel it to investors for investment
Acha, G. (2011). Does bank financial intermediation cause growth in developing Economies, the Nigerian Experience, Interbond business and Management, 3 (1), 156-161. www.academia.edu/26683568. DOI 10.3968
Adedoyin and Shobodun, (1991). Lending in Banking Business, Problems and Prospect,3rd edition, pg 23-34, Saiye Printers, Lagos
Adedoyin, and Sobodun, (1996), Commercial Banks Lending Activities in Nigeria, Nigerian Financial Review, 9(3), 36 – 37.
Ajayi, D. (1978). Deposit Rates in a deregulated Regime and its implications, 3, pg 55-67, University Press limited.
BOFIA, (1998). Requirement for Investment and Lending behavior in Nigeria banking industry. www.cbn.gov.ng/out/publications/bsd
Carletti, E., Cerasi, V. and Daltung, S. (2006), Multiple-Bank Lending: Diversification and Free-riding in Monitoring, Working Paper, Department of Statistics: Universita degli Studi di Milano-Bicocca,. https://ideas.repec.org/a/eee/jfinin/v16y2007i3p425-451.html
Chizea, B. (1994), Finance for Farming: A Guide to the Lending Banker; Lagos: Institute of Banker, Nigeria.
Chodechai, S. (2004), Determinants of Bank Lending in Thailand: An Empirical Examination for the years 1992 – 1996, Unpublished Thesis.
Ekezie, E. S. (2006).The Elements of Banking, Onitsha,Nigeria: Africana First Publishers Limited.
Ewert, R. and Schenk, G. (1998), Determinants of Bank Lending Performance, Working Paper, Center for Financial Studies, University of Frankfurt. https://econpapers.repec.org/RePEc:zbw:cfswop:199806
Ewert, R., Szczesmy, A. and Schenk, G. (2000), Determinants of Bank Lending Performance in Germany ,Schmalenbach Business Review (SBR), 52, 344 – 362. https://www.researchgate.net/publication/24049864
Goldfield, M. and Chandler, L. (1986), The Economics of Money and Banking, 9th edition, NewYork: Harper and Row Publishers.
Gujarati, D. N. (2004). Basic Econometrics, 4th ed, New York: McGraw-Hill companies.
Ituwe, T. (1983) Elements of practical Banking, a textbook 2nd edition, Ibadan, University Press
Jhingan, M. L. (2008). Money, Banking, International Trade and Public Finance, 7th Edition, Delhi:Vrinda Publications (P) Ltd.
John, P.O. (1998), A Practical Guide to Bank Lending and Administration, Lagos: Du Prince and Pal.
Mason, J. (1996). Qualitative researching. Second edition, University of Manchester.
Nwankwo, G. O. (2000), Organizing for Financial Risk Management, The Credit Administrator, 2(2), 32-39. https://www.coursehero.com/file/p1a66n4/
Ojo, J. A. T. (1999), Roles and Failures of Financial Intermediation by Banks, CBN Bullion, 23(3),10-12.
Olokoyo, F. O. (2011). Determinants of Commercial Banks’ Lending Behavior in Nigeria, International Journal of Financial Research 2(2),July, 61-72. Retrieved on 21 February, 2013.(www.sciedu.ca/ijfr)
Olusanya,S. O., Oyebo, A. O. Ohadebery, E. C., (2012).Determinants of Lending Behavior of Commercial Banks: Evidence from Nigeria, A co-integration Analysis(1975-2010). Journal of Humanities and Social science, 5,Nov.-Dec.,77-80.
Oloyede, B. (1999), Principles of Money and Banking, Ado: Forthright Educational Publishers.
Osayameh, R. (1996), Practice of Banking: Lending and Finance, 2, Lagos: F.A. Publishers.
Peek, J. and Rosengren, E. S. (1995), Bank Regulation and the Credit Crunch. Journal of Banking and Finance, 19, 679-692. http://www.sciencedirect.com/science/article/pii/0378-4266(94)00148-v
Stiglitz and Weiss (1991). Analysis of Loan and disbursement in the Commercial Bank, 2nd edition, Macgraw Hill Publication limited.Uhomoibhi
Usman, S. (1999, Jan- March), Bank Regulation and Supervision in Nigeria, The Nigerian Banker, 7-9
How to Cite
Copyright (c) 2018 Biwet Mwanret Inusa
This work is licensed under a Creative Commons Attribution 4.0 International License.