Non-performing Loans and Banks’ Profitability in Nigeria

Abstract

: The study investigated the effect of non-performing loans on bank profitability in Nigeria. This study adopts among other techniques the Ordinary Least Squares (OLS) test method. A multiple regression model was formulated to ascertain the relationship between the non-performing loan and banks profitability variables. Our findings establish that Non-performing Loan exhibited negative and insignificant relationship with Return on Capital Employed, and Performing Loan shows a positive and significant relationship with Return on Capital Employed. However, our result with negative coefficients for Non-performing Loan (NPL) indicates that if they are increased, can also decrease Return on Capital Employed (ROCE). The study therefore advocate that there should be a committed effort by regulation agents to reduce monitor loan access issues and utilization of borrowed fund through financial probe, with sanction implemented to save the future, also government should create an effective and favourable socio-political environment with facilities that will attract more investment into the country