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Non-Performing Loan And Its Effects On Banking Stability: Evidence From National And International Licensed Banks In Niger, Ngozi V. Atoi
Non-Performing Loan And Its Effects On Banking Stability: Evidence From National And International Licensed Banks In Niger, Ngozi V. Atoi
CBN Journal of Applied Statistics (JAS)
This study examines Non-Performing Loan (NPL) and its effects on the stability of Nigerian banks with national and international operational licenses from 2014:Q2 to 2017:Q2. A “restricted” dynamic GMM is employed to estimate the macroeconomic and bank specific drivers of NPL for each licensed category. Z-Score is constructed to proxy banking stability, and its response to shocks NPLs is examined in a panel vector autoregressive framework. The results reveal that drivers of NPLs vary across the two categories of banks, but, weighted average lending rate is a vital macroeconomic driver of NPLs for both. The results also confirm the moral …