EFFECT OF NONPERFORMING LOAN ON RETURN ON ASSET OF DEPOSIT MONEY BANK IN NIGERIA: A CASE STUDY OF FIRST BANK OF NIGERIA PLC. AND FIDELITY BANK PLC

Abstract

The paper examined the effect of non-performing loans on the return on assets of deposit money banks between the periods 2007 to 2022. The study used ex-post facto research design. The secondary data collected from the Central bank of Nigeria statistical bulletin 2022 edition was used to analyze the effects. The data analysis was done using Panel least square regression and Granger causality test. The result showed that non-performing loans has negative effect on the return on assets of deposit money banks in Nigeria. The paper concludes that high non-performing loans leads to a decrease in the return on assets of deposit money banks in Nigeria. The study recommends that banks should assess every loan request with due diligence following various guidelines prescribed for them by the central bank of Nigeria and the banks policy on lending.