Predicting potential of failure in Nigerian banking sector, a comparative analysis of first bank Plc; and trade bank Plc;
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Date
2007
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Department of Political Science and Public Administration, Babcock University.
Abstract
The consequential disruption of the payment system, that spirally reduce employment level, per capital income and Gross Domestic Product (GDP) which hampers the growth of small scale businesses are the concomitants of bank failure which if not timely addressed might worsen the poverty level of Nigerians. This study evaluates the susceptibility of Nigerian banks failure with a view to discriminate between sound and unhealthy banks a guide to investment decisions using First Bank and Trade Bank as case studies. Multivariate Analysis of Z Scores was carried out on the secondary data obtained from the bank’s annual reports and accounts between 1998 and 2003 and it was concluded the model can measure accurately potential of failure of unhealthy banks but inaccurately the failure status of sound banks. A more rigorous study involving more healthy and unsound banks is recommended to establish the accuracy of prediction of the model.
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Keywords
failure, bank, unemployment, GroSS Domestic Product
Citation
Olaniyi, T. A. (2007): Predicting potential of failure in Nigerian banking sector, a comparative analysis of first bank Plc; and trade bank Plc;, Babcock Journal of Management and Social Sciences. 6 (1); 64- 73