{"title":"Determinants of nonperforming loans after recapitalization in the Nigerian banking industry: Does competition matter?","authors":"Segun Thompson Bolarinwa, Anthony Enisan Akinlo","doi":"10.1111/1467-8268.12661","DOIUrl":null,"url":null,"abstract":"<p>This paper examines the effect of competition on nonperforming loans in the Nigerian banking industry between 2011 and 2018 using the system generalized method of moments. The findings establish the competition-stability hypothesis in the Nigerian context. The interaction between competition and bank size/capitalization has a positive and significant effect on nonperforming loans. These results showed that low competition increased nonperforming loans in the Nigerian banking industry while bank size and capitalization enhanced competition to increase nonperforming loans. Also, bank size/capitalization are complementary for addressing nonperforming loans. The paper recommends that the Central Bank of Nigeria (CBN) regulates the market power of the five largest banks in the industry to address the adverse effects of competition on mounting nonperforming loans in the Nigerian banking industry.</p>","PeriodicalId":47363,"journal":{"name":"African Development Review-Revue Africaine De Developpement","volume":"34 3","pages":"309-323"},"PeriodicalIF":3.1000,"publicationDate":"2022-08-19","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"3","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"African Development Review-Revue Africaine De Developpement","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/1467-8268.12661","RegionNum":2,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q1","JCRName":"DEVELOPMENT STUDIES","Score":null,"Total":0}
引用次数: 3
Abstract
This paper examines the effect of competition on nonperforming loans in the Nigerian banking industry between 2011 and 2018 using the system generalized method of moments. The findings establish the competition-stability hypothesis in the Nigerian context. The interaction between competition and bank size/capitalization has a positive and significant effect on nonperforming loans. These results showed that low competition increased nonperforming loans in the Nigerian banking industry while bank size and capitalization enhanced competition to increase nonperforming loans. Also, bank size/capitalization are complementary for addressing nonperforming loans. The paper recommends that the Central Bank of Nigeria (CBN) regulates the market power of the five largest banks in the industry to address the adverse effects of competition on mounting nonperforming loans in the Nigerian banking industry.
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