Department of Finance

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https://repository.run.edu.ng/handle/123456789/62

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Browsing Department of Finance by Subject "Banking"

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    Bad Debts and Investment Growth among Nigerian Banks: An Empirical Analysis
    (IJECM.co.uk, 2015-05) Ayodele, Thomas
    The principal task of bank management is to generate sufficient return on their shareholders investment. However, of recent, there have been criticisms and allegations of bad and doubtful debts reported by banks annually. This raise the question as to whether banks accomplish the task of maximizing shareholders’ returns on their investment and whether the banking system is still one of the most enviable and profitable investment options in Nigeria. In the study, an attempt was made to identify the causes of bad and doubtful debts, effects on banks’ profits and investment and how they can be ameliorated with the use of appropriate securities and management teams put in place. The study made use of secondary data collected from ten-year annual reports of First Bank Nig. PLC, a sample selected purposively from Nigerian commercial banks. Regression analysis was used to determine the effect of bad debts on the investment growth of the bank. And it was discovered that bad and doubtful debts has an inverse relationship with investment growth of the bank. And, loan losses and credit risk if not checked will lead to low investment growth rate thereby jeopardizing shareholders’ returns. It is therefore suggested that both commercial banks and monetary authorities should put necessary machinery in place to safeguard any impending loan losses in the banking sector in order to instill confidence among depositors and boost the Nigerian economy as a whole.