Asset Quality and Deposit Money Bank Performance in Nigeria


  • Theresa Ofoegbu Babcock University, Nigeria
  • Folajimi Festus Adegbie Babcock University, Nigeria



Asset quality, financial performance, Non-performing Loan, Return on asset


The banking industry globally plays a vital role in social and economic activities development of any economy through loan extension to investors. The banking industry in Nigeria has been plagued with problems of high level of non-performing loan, untraceable insider loans and challenges of poor assets quality management, thus reduced aggregate financial performance in terms of return on equity, profit after tax, return on assets and market value. The study therefore examines the effect of assets quality on Deposit Money Banks Performance in Nigeria. The research design employed was ex-post facto research design. The study population comprises of the 16 deposit money bank quoted in the Nigerian Stock Exchange over a period of 10 years ranging from 2009 to 2018. A sample size of 10 leading quoted deposit money banks was selected and purposive sampling technique was employed. The findings revealed that assets quality measures significantly effect on assets of selected quoted deposit money banks in Nigeria (Adjusted R2 = 0.28, F-statistics = 6.56 .:p = 0.00<0.05The study concluded that assets quality measures significantly affect performance components in terms of return on assets deposit money banks in Nigeria. Therefore the study recommended that deposit money banks in Nigeria should embraced credit risk identification, measurement, monitoring and controlling, and customers credit screening in order to achieve sound assets quality thus reduced the rate of non-performing loans and increase aggregate financial performance measures.


Download data is not yet available.


Abata, M. A., (2014). Assets quality and bank performance. A study of commercial banks in Nigeria. Research Journal of Finance and Accounting, 5(18), 39-44

Abba, G. O., Okwa, E., Soje, B., & Aikpitanyi, L. N. (2018). Determinants of capital adequacy ratio of deposit money banks in Nigeria. Journal of Account Mark, 7(4), 271-289.

AbdulGafoor, C. P., Mariappan, V., & Thyagarajan, S. (2018). Does the board structure affect the asset quality of the banks? Evidence from India. Kozhikode Society and Management, 2 (5), 23-37.

Adekunle, S. A., & Aghedo, E.M. (2014). Corporate governance and financial performance of selected quoted companies in Nigeria. European Journal of Business and Management, 6(9), 53-61.

Adeolu, M. (2014). Asset quality and bank performance. A study of commercial banks in Nigeria. Research Journal of Finance and Accounting, 5(18), 39–44.

Ahmed, F., & Tripati, A. (2017). Non-performing assets and profitability of scheduled commercial banks. Journal of Business and Management, 19(9), 1-11

Ahmed, J. U. (2011). Management of non-performing assets of commercial banks: The evidence from Indian banking sector. International Journal of Financial Management, 1(3), 14-31

Akani, H. W., & Akani, V. (2018). Theoretical perspectives of earnings, profitability and asset quality in banking. Descriptive evidence from Nigeria economy. World Journal of Finance and Investment Research, 3(1), 1-24.

Alhassan, A. L., Kyereboah-Coleman, A. and Andoh, C. (2014). Asset quality in a crisis period: An empirical examination of Ghanaian banks. Review of Development Finance, 4(1), 50-62.

Banerjee, R., Verma, D., & Jaiswal, B. (2018). Non-performing assets: A comparative study of the Indian commercial banks. International Journal of Social Relevance & Concern, 6(2), 5-21.

Bawa, J. K., Goyal, V., Mitra, S.K. & Basu, S. (2019). An analysis of NPAs of Indian banks: Using a comprehensive framework of 31 ?nancial ratios. Management Review, 31, 51–62

Campbell, J. Y., Hilscher, J., & Szilagyi, J. A. N. (2005). In search of distress risk. The Journal of Finance, 28(6), 2899–2939.

Chaghadari, M. F. (2011). Corporate governance and firm performance. International Conference on Sociality and Economic Development, 10, 484–489.

Devi, P., & Pant, A. (2018). Impact of NPA on profitability performance of select public and private sector banks in India. International Journal of Management, IT & Engineering, 8(7), 7-19

Dhananjay, B., & Mahim, S. (2016). Examining relationship of income diversification, asset quality with bank profitability: Implication for Indian banks. International management Journal, 8(1), 1-11

Egungwu, I., & Egungwu, N. U. C. (2018). Effect of corporate governance on asset quality of banks (evidence from Nigeria). International Journal of Academic Research in Business and Social Sciences, 8(12), 1981 – 2002.

Ezeoha, A. E. (2011). Banking consolidation, credit crisis and asset quality in a fragile banking system: Some evidence from Nigerian data. Journal of Financial Regulation and Compliance, 19(1), 33-44.

Frederick, N. K. (2014). Factors affecting performance of commercial banks in Uganda: A case for domestic commercial banks. Proceedings of 25th International Business Research Conference, 1-19.

Gleeson, E.J. (2015). An assessment of asset and liquidity quality as indicators of performance within the European banking sector. MSc Dissertation, National College of Ireland, (2), 301–325.

Gupta, B. (2012). A comparative study of non-performing assets of SBI & associates & other public sector banks. Journal of Management, 2(3), 175-189

Hana, S., & Lenka, Š. (2010). Criteria for the evaluation and selection of capital projects. Intellectual Economics, 1(7), 48–54.

Hart, O. (1995). Corporate governance: Some theory and implications. The economic journal, 105(430), 678–689.

Ibrahim, S., & Thangavelu, R. (2014). A study on the composition of non-performing assets (NPAs) of scheduled commercial banks in India. Journal of Finance and Bank Management, 2(1), 31-48.

Ikpefan, O. A. (2013). Capital adequacy, management and performance in the Nigeria commercial banks (1986- 2006). African Journal of Business Management 7(30), 2938-2950.

Kamande, E. G. (2017). The effect of bank specific factors on financial performance of commercial banks in Kenya. MBA Thesis, South Eastern Kenya University.

Khalid, A. C. (2012). The impacts of assets quality on profitability of private banks in India: A case study of JK, ICICI, HDFC and YES banks: Journal of African Microeconomic Review, 2(1), 1–22.

Kosmidou, K. (2008). The determinants of banks' profits in Greece during the period of EU financial integration. Managerial Finance, 34(3), 146–159.

Kumar, P. T. (2013). A comparative study of NPA of old private sector banks and foreign sector banks. Research Journal of Management Sciences, 2(7), 38-40

Lim, S. C., Macias, A. J., & Moeller, T. (2014). Intangible assets and capital structure. Retrieved November 28, 2018, from

Lucky, A. L., & Nwosi, A.A., (2015). Asset Quality and profitability of commercial banks: Evidence from Nigeria. Research Journal of Finance and Accounting, 6(18), 26-34.

Mburu, G. N. (2017). The influence of asset quality on financial performance of commercial banks performance in Kenya. Unpublished Thesis University of Nairobi.

Momoh, O. A., & Ajiboye, L. O. (2018). Insurance companies’ service delivery and profitability in Nigeria. The Nigerian Accountant, 52(1), 4-10

Nzewi, U. C. (2004). Financial and investment analysis. Onitsha: Noben Press Limited.

Nzoka, F. K. (2015). The effect of assets quality on the financial performance of commercial banks in Kenya. (Unpublished M.Sc. Thesis), University of Nairobi.

Ogboru, M. J. (2019). Asset quality and deposit money banks performance in Nigeria. American International Journal of Business and Management Studies, 1(1), 43-54

Peters, G., & Bagshaw, K. (2014). Corporate governance mechanisms and financial performance of listed firms in Nigeria: A content analysis. Global Journal of Contemporary Research in Accounting, Auditing and Business Ethics, 1(2), 103-128.

Porter, M. E. (1995). The competitive advantage of the inner city. Harvard Business Review, 1, 55- 71.

Rufo, M. & John, P. R. (2017). The effect of credit risk and capital adequacy on the profitability of rural banks in the Philippines. Scientific Annals of Economics and Business, 64(1), 83-96.

Sang, J. C., Chune, Y. C., & Jason, Y. (2019). Study on the Relationship between CSR and Financial Performance. Sustainability, 11, 343-354.

Sanghani, D. A. (2014). The effect of liquidity on the financial performance of non-financial companies listed in The Nairobi securities exchange. M.Sc. Thesis, University of Nairobi

Selvarajan, B., & Vadivalgan, G. (2013). A study on management of non-performing assets in priority sector reference to Indian Bank and Public Sector Banks (PSBs). International Journal of Finance and Banking Studies, 2(1), 34-47.






Main Section

How to Cite

Asset Quality and Deposit Money Bank Performance in Nigeria. (2022). Indian-Pacific Journal of Accounting and Finance, 6(2), 3-14.

Similar Articles

1-10 of 67

You may also start an advanced similarity search for this article.

Most read articles by the same author(s)

1 2 3 4 5 6 7 8 9 10 > >>