Browsing by Author "Abdulkadir, Rihanat"

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    Economic Downturn and Credit Risk: Empirical Evidence from the Nigerian Banking Sector
    (2018) Abdurraheem, Abdulazeez; Abdulkadir, Rihanat; Etudaiye-Muhtar, Oyebola
    This paper investigates the impact of the economic downturn on the credit risk of the Nigerian banking sector using quarterly data for the period 2007 -2016. The study employs ARDL (Autoregressive Distributed Lag) approach to cointegration. The study also conducted causality test using the Modified Wald (MWALD) test proposed by Toda and Yamamoto (1995) to determine the direction of causality among the variables. The results provide empirical support for the existence of a long-run relationship between the credit risk of Nigerian Banks and macroeconomic variables, namely GDP growth, interest rate, inflation and foreign exchange rate. Most importantly the study finds greater causality power of interest rate, inflation and foreign exchange rate over the credit risk of Nigerian Banks during the study period. The findings of the study have important implications for the impact of the macroeconomic factors on the quality of risk assets of the bank. One practical implication for Nigerian Banks, is the integration and assessment of the potential impact of the macroeconomic environment into the evaluation and assessment mechanism of the quality of their risk asset portfolio. Similarly, in order to mitigate another round of banking crisis and therefore a financial system instability in the country, the government and monetary authority should therefore, work to harmonise the government fiscal policies and the monetary policies with a view to reducing the interest rate, inflation and exchange rate in order to reduce the negative impact of volatile macroeconomic environment on the risk assets of the banking sector.
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    Microeconomic and Macroeconomic Determinants of Bank Profitability in Nigeria
    (2017) Etudaiye-Muhtar, Oyebola; Abdulkadir, Rihanat; Gold, Lola
    Development of the banking sector and increasing importance of banks’ role in the economy has significantly led to an increase in bank-focused literature. To this end, this study investigated microeconomic (bank specific and industry-specific) and macroeconomic determinants of bank profitability in 16 Nigerian commercial banks for the period 2010 - 2014. Using the Pooled Ordinary Least Squares regression method, microeconomic factors (credit risk, capital adequacy, cost management efficiency, liquidity, size and market structure) and macroeconomic factors (gross domestic product and inflation) were regressed against two measures of bank profitability (net interest margin and return on average assets). The results indicated that size, cost management efficiency, bank liquidity and market structure are significant microeconomic determinants of Nigerian commercial banks’ profits while gross domestic product and inflation are the significant macroeconomic determinants with microeconomic factors having a higher explanatory power. Based on the findings, the study recommended that for Nigerian commercial banks’ earnings to improve, they should maintain a low cost profile, low liquidity level as well as growth in their operations. For policy makers and regulators in the industry, we recommended the sustainment of a low inflationary environment as well as growth in the economy for bank earnings to increase.