DETERMINANTS OF NON-PERFORMING LOANS (NPLS) IN EMERGING ECONOMIES EVIDENCE FROM NIGERIAN BANKING INDUSTRY

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ABSTRACT

This study examined the determinants of non-performing loans in emerging economies with evidence from the Nigerian banking industry. The study adopted the ex-post facto design. Time series data for the period 1993-2014 were collated from the Central Bank of Nigeria Statistical Bulletin and Financial Statement of banks for the period. The Ordinary least square regression was used to test the five hypotheses stated. Non-performing loans measured by the natural logarithm of aggregate non-performing loans of banks represented the dependent variable while gross domestic product, inflation rate, total loans and advances, total assets and bank’s lending rate were adopted as the independent variables for the five hypotheses of the study. Macroeconomic variables such as exchange rate, and interest rate were also included as control variables. Descriptive statistics on the dependent, independent and control variables were also computed and graphed to complement the regression results. The result emanating from this study  revealed  that  gross  domestic  product  had  negative  effect  on  non-performing  loans; Inflation rate had positive effect on non-performing loans but was insignificant; total loans and advances had positive effect on non-performing loans and was statistically significant at the 0.05 level;  total  Assets  exerted  negative  effect  on  non-performing  loans  and  was  statistically significant at the 0.05 level and Bank lending rate had positive and insignificant effect on non- performing loans. The study therefore concludes that bank-specific factors drive changes in or determine Non-performing loans more than macroeconomic factors in Nigeria. This should affect the direction of economic policies in the country. It is recommended, among others, that macroeconomic policy  should be  directed at  sustaining economic growth as  it  curbs non- performing loans in the banking industry.

1.1      Background to the Study

CHAPTER ONE

INTRODUCTION

Emerging economies as defined by Center for Knowledge Societies (2008), are those regions of the World that are experiencing rapid informationalization under conditions of limited or partial industrialization. The emerging economies often referred to as “Emerging Markets” (Bloomberg,

2006) are Countries that have the characteristics of developed markets but are not yet developed markets. These include countries that may become developed markets in the future or were in the past. It may be a nation with social or business  activity in the process of  rapid growth and industrialization.   Kveint   (2009:3)   explains   that  â€œemerging   market   country  is  a  society transitioning from a dictatorship to a free-market-oriented-economy, with increasing economic freedom, gradual integration with the Global Marketplace and with other members of the Global Emerging  Market  (GEM),  an expanding  middle  class,  improving  standards  of living,  social stability and tolerance, as well as increase in cooperation with multilateral institutions”.

According to Robert (2000:1), the emerging economies are low-income, rapid-growth countries using economic liberalization as their primary engine of growth. He explained  that the major government  policy  tool  is  the  capital  account  liberalization,  which  is  a  parameter  used  in measuring the degree of openness of an economy, signaling the rate of inflow and outflow of capital   from   one   country   to   another   without   undermining   its   territorial   integrity   and independence. The extremes of the continuum are strict controls, which come in some variety, and liberalized markets, where economic agents freely interact under commonly applicable rules to clear the markets.

In the early 1980s, the term, newly industrialized countries, was applied to a few fast-growing and liberalizing Asian and Latin American countries. Because of the wide spread liberalization and  adoption  of  market-based   policies  by  most  developing   countries,   the  term  â€œnewly industrializing  countries”  has  now  been  replaced  by  the   broader  term  emerging  market economies  (Adedipe,  2006).    Thus,  an emerging  economy  has  further  been  explained  as a country that  satisfies  two  criteria:  a rapid  pace  of  economic  development,  and  government policies favouring economic liberalization and the adoption of a free-market system (Anold & Quelch, 1998).

The International  Finance  Corporation  (IFC,  1999)  identified  51 rapid-growth  economies  in Asia, Latin America, Africa and the Middle East in addition to the 13 transitional  economies following the collapse of Communism in Eastern and Central Europe in 1989.  Over time, the Emerging  Economies  countries  became  classified  as  regional  economic  blocks  which  are identified as follows:

  The BRICS Countries (Brazil, Russia, India, China, and South Africa).

  The  CIVETS  Countries  (Columbia,  Indonesia,  Vietnam,  Egypt,  Turkey  and  South Africa).

  MINT (Mexico, Indonesia, Nigeria and Turkey).

  Others include (Bangladesh, Iran, Pakistan, Philippines, Poland, and South Korea, etc).

Miller  (1998)  summarizes  the  most  common  characteristics  of  emerging  markets  using  the following parameters, and comparing emerging markets with developed economies in the table below as follows:

1)  Physical characteristics-  in terms of an inadequate commercial infrastructure as well as inadequacy  of  all other  aspects  of  physical  infrastructure  (communication,  transport, power generation);

2)  Sociopolitical   characteristics-   which   include,   political   instability,   inadequate   legal framework,  weak social discipline,  and reduced technological  levels, besides  (unique) cultural characteristics; and

3)  Economic  characteristics-  in  terms  of  limited  personal  income  centrally  controlled currencies  with  an influential  role of government  in economic  life,  in  managing  the process of transition to market economy.

Comparing  emerging  markets  (and  emerging  economies)  with  developing  countries,  it  is necessary to understand why emerging economies are so important for world economic growth. Differences  between emerging economies and developed  economies are presented  in Table 1 below.

Table 1.1(a): Comparison between Developed and Emerging Markets

S/NDimensionsDeveloped marketsEmerging markets
1Level of economic developmentHighLow/ Medium
2State of economy (and society)Developed/ StableTransitional/ Unstable (Economic/Political reforms)
2.1.Macroeconomic frameworkDeveloped/ StableUndeveloped (being created)
2.2.Market institutionsDevelopedUndeveloped (being built)
2.3.Market conditionsStable(Un)stable
2.4.Market infrastructureDevelopedUndeveloped (being built)
2.5.Governmental involvementNot so highRelatively high
2.6.Cultural resistance to market EconomyLowHigher
3.Rate of growthLowHigh
4.Room for growthNarrow (matured markets)Huge (undeveloped markets)

Source: Adapted from Emerging Markets: a Review of Conceptual Framework by Sunje, et al.

The  growth  of  emerging  economies,   resulting   from  economic  liberalization,   led  to   the proliferation  of  private  and  State-owned  banks  in the  developing  countries,  and  competing aggressively  with government  owned  banks and among themselves  in order  to  survive.  The pressure  of demand  for goods and services  and the  large capital  inflows  from International markets caused the local banks to continue to expand their total loans and advances portfolio. Most of these loans could not be repaid following the cyclical nature of the individual emerging economies which result into banking crises.

The various governments, having liberalized their economies started experiencing large capital inflows  with  increasing  demand   for  goods  and  services.  The  channels   for   these   huge International banking transactions were the local banks. The resulting economic  boom led the banks to develop high appetite for profitability through the expansion of their loans and advances portfolio  despite  their  inadequate  preparation  for  financial  liberalization.  This  led  to  the deterioration of average bank asset quality across  the emerging economies (Beck, 2013). The fact that loan performance is still linked to the economic cycle is well known. During economic crash, most of these loans could not be repaid as at when due. The implication was NPLs for the banks and often banking failure.

The emerging economies promise huge potential for growth but also pose significant political, monetary, and social risks. The framework for the emerging economies explains how the non- industrialized  nations of the world are achieving  unprecedented  economic  growth using new energy,   telecommunications   and  information   technologies.   The   emerging   economies   are

becoming the potential business leaders in the world in providing products and services at low cost and in quick time to consumers.

The implication of the framework of the emerging economies for the banking industries is such that large capital inflows are in principle desirable for relatively low income countries; they also pose the potential risk of sudden stops leading to large economic and financial imbalances. To control this potential risks facing the emerging economies, the country’s financial system need to be strengthened.

The financial system plays a fundamental role in the growth and development of an economy, particularly by serving as the fulcrum for financial intermediation between the surplus and the deficit units in the economy. A robust financial system that imbibes the  smooth and efficient flow of investment  process,  lays foundation  for financial  stability  and sustainable  economic development of a country.

The economic growth in any country is not possible without a sound financial sector that is made up of financial institutions (Rajaraman  and Visishtha, 2002).   These financial  institutions  not only ease  the  credit  flow in the  economy but also  enhance  the  productivity  by revitalizing investments (Richard, 2011). Good performance of these financial institutions is the symbol of prosperity and economic growth in any country or region and their poor performance will not only damage the economic growth and structure of the particular region but also impact on other economies (Khan and Senhadji, 2001).

The role of banking  industry is versatile;  Banks utilize  the depositor’s  funds in an  efficient manner, share risk, play a significant role in the growth of economy, are always critical to the whole financial system and remain at the centre of financial crisis (Franklin and Elena 2008).One of  the  main  causes  of  financial  instability  or  crisis  is  the  percentage  of  non-performing loans(NPLs) to the total assets of the banks both in developed and emerging economies.

In the last few decades, there have been many banking failures all over the world (Brownbridge and Harvey,  1998), following  which many banks have been closed by regulatory authorities (Barr and Siems,  1994; Chijoriga,  1997; Brownbridge,  1998;  and  Brownbridge  and Harvey,

1998). Non-performing loans are one of the main reasons that cause insolvency of the financial institutions and ultimately hurt the whole economy (Hou, 2007). By considering these facts it is necessary to control non-performing loans for the economic growth in the country by identifying

and  sensitively managing  those  variables  that  are causing  loan defaults,  and  are capable  of damaging the financial  stability and also the economic growth.  In order to control  the  non- performing loans it is necessary to understand the root causes of these non-performing loans in the particular financial sector (Rajaraman and Visishtha, 2002).

It is important to understand the phenomena and nature of non-performing loans; it has many implications, as fewer loan losses is indicator of comparatively more firm financial system, on the other hand high level of non-performing loans is an indicator of unsecure financial system and a worrying signal for bank management and regulatory authorities. If we look into the causes of the 2007-2009  global financial crises which damaged  not only economy of USA but also economies of many countries of the world we find that  non-performing loans were one of the main causes (Adebola, Wan Yusoff, & Dahalan, 2011). During economic booms, high risk loans were found  to be granted  to unqualified  borrowers  and  were secured  against  overestimated collateral values or against nothing. When this economic boom went burst, those high risk loans turned into Non-Performing Loans (Chijoriga, 1997).

Chang  (1999)  explains  that  the  role  of banks  in credit  creation  process  is considered  very relevant  in sustaining  financial  stability.  But  strong financial  foundation  is often  shaken  by impaired credits referred to as non-performing loans (NPLs). He argued that the success of any business enterprise especially banks, is to add value to their shareholders wealth by remaining in profit at the end of their financial  year; and where this profit or  surplus is impaired  by high default rate in loan repayment, the degree of success of the bank become greatly challenged such that the health of the bank will become doubtful. Loans are the major output provided by banks, but loan is a risk output. There is always a foreseen (ex ant) risk of non-repayment of a loan before the loan will finally become non-performing which can be treated as undesirable output or costs to a bank and impacts negatively on the bank. High non-performing loans results into credit crunch  which  causes  a  bank  to  start  to  avoid  further  lending  despite  high  demand  from borrowers.

In Nigeria,  Somoye  (2010)  reviewed  the  performance  of  banks  within  the  context  of  non- performing loans. The results showed that variations in non-performing loans impacted  on the banks earnings followed by the risk of fluctuating interest rates resulting from monetary policy rate adjustments by the monetary policy authorities. The results largely supported the findings from the study on non-performing loans conducted on Sub-Saharan Africa countries by Fofack (2005) who maintained that a loan is non-performing where earnings due are no longer available

to profit because full repayment of principal or interest is 90 days or more delinquent, and, or, the maturity date has passed and repayment in full has not been made.

Evidence  from  literature  shows  that  the  studies  on  non-performing  loans  have  focused  on advanced  economies  like the United  States of America  (USA),  Spain,  and United  Kingdom (UK), and emerging economies  like China, Taiwan,  India, Brazil, Egypt,  Indonesia,  Turkey, Malaysia, Bangladesh, Pakistan, South Korea etc., but with very scanty literature on the Nigerian economy which has been grouped as one of the emerging economies.

The studies in the Nigerian economy have concentrated on bank failures with non-performing loans as one of the major factors but without corresponding studies on  non-performing  loans itself. This suggests that the study on the determinants/causes of non-performing loans as a major factor for bank failures have been ignored. This is a  knowledge  gap that needs to be filled. Therefore,  the aim of this  study is to  analyze  the  sensitivity  of the  â€œDeterminants  of  non- performing loans in emerging economies with evidence from Nigerian Banking Industry”. The objective  based  on  existing  International  evidence  is  to  explain  the  determinants  of  non- performing loans by identifying the macroeconomic and the bank specific factors.

1.2      Statement of the Research Problem

Gross Domestic Product (GDP) has remained one of the macroeconomic factors that determines Non-Performing   Loans.  From  literature,   Nigerian  GDP  has  shown  robust   growth  trend throughout the period of this study. It was expected (all things being equal) that borrowers’ cash flow would have improved to ease their repayment capabilities, but NPLs increased to all time high of N2, 992.80 billion in 2009. My interest lies on the fact that I did not see result-oriented efforts being put in place by the Federal Government through the Central Bank of Nigeria and other regulatory bodies to cause the positive GDP to reflect in loan repayments so as to close the gap created. Okonjo-Iweala (2010) position that the Country’s GDP has shown positive growth, but  worrisome  was  the  lack  of  corresponding  improvement  on  the  welfare  of  the  people, supported the researcher’s problem statement.

The  researcher  identified  Inflation  Rate  (INFR)  as  one  of  the  Non-Bank-Specific  variable determinants of NPLs in the Nigerian Banking Industry. Higher inflation can enhance the loan repayment of borrowers by reducing the real value of outstanding debt. It can also weaken the loan repayment capability of the borrowers by reducing the real income when Salaries/Wages are sticky.  The  researcher’s  computation  has  shown  that  inflation  trend  in  Nigeria  has  been fluctuating widely. It rose to 72.80% in 1993 and dropped to 3.29% in the year 2,000. It made

loan repayment plans difficult, thus, increasing NPLs. There was no strong economic blue-print by the government to close the wide inflation gap to lower level as in most economies. Previous studies supporting the researcher’s position include Nkusu, (2011); Khemraj and Pasha, (2009); Fofack, (2005); and Adebola et, al (2011).

The study identified Total Loans and Advances (TLADV) as one of the Bank-Specific factors that determines NPLs. A positive relationship  exists between TLADV and NPLs  such that as banks increase their loan portfolios, the rate of default in loan repayment increases. Within the period  of this study,  Nigerian  Banks  were  found  lending  in excess  of their  deposit/lending threshold  or ratio in order to satisfy their high appetite for  profitability.  The implication was increase in NPLs. The Central Bank of Nigeria (CBN) did not close the gap that led to reckless lending by the banks. I did not see the CBN effectively applying the relevant provisions of the Prudential Guidelines  and BOFIA to  control the banks lax lending habit.   In order to check indiscriminate lending, banks in Nigeria could have taken a cue from the experience of the USA. MaGovern (1993) examined the case of the USA and noted that ‘Character’ has historically been a paramount factor of credit and a major determinant in the decision to lend money.

When loans are repaid, they add to the Total Assets (TA) base of the bank and the overall NPLs is reduced. Banks face insolvency due to declining total assets values when bank borrowers are unable to repay their debts as a result of adverse shock to economic activities. It is a sign of stability  when  banks  increase  their  asset  base  significantly  such  that  it  can  afford  to  raise provisions  for  doubtful  debts  and  eventually  write  them  off.  Between  1993  and  2009,  the Nigerian Banking Industry reflected a substantial rise in the general quality of assets and NPLs, suggesting that the quality of total assets had influenced the level of NPLs. The researcher will like to know why there was a gap resulting in the less effective reform policies prior to 1993 which could not address the issues of credit expansion emanating from the growth in the asset qualities of banks whereas the  Prudential guidelines remains an available tool to restrain the banks from injurious  credit  expansion..  The situation escalated  and eventually culminated  in failure of most banks in 2005. Earlier studies such as Dimirguc-Kent and Detriagiache, (1995); Arellano, (2006); and Hue et, al (2006) lay credence to this problem.

A rise in Bank Lending Rate (BLR) weakens loan repayment capacity of the borrower. This goes to show that interest rate policy plays very crucial role in growth or decline of NPLs in Nigeria. The highest BLR in 1993 was averaged 36.09% – this was considered very high. Although the interest rate policy makers reduced it to average 18.70% in 2008, it rose again to 25.74% average in 2014. Why didn’t the Central Bank of Nigeria remain consistent towards maintaining a lower and stable BLR? Previous  studies that support lower BLR in  order to reduce NPLs include Nkusu, (2011); Dash and Kabra, (2010); and Farhan et, al (2012).

In consideration of the above stated problems, the researcher is tempted to ask; why were the financial system stability managers in Nigeria and the external regulatory bodies not proactive and disciplined enough to manage this situation? This question and others will form the basis of this research.

1.3      Research Objectives

The  main  objective  of  this  study  is  to  examine  the  bank  specific  and  nonbank  specific (macroeconomic)  factors  (or  determinants)  affecting  non-performing  loans  in  the  Nigerian Banking Industry. Specifically, the study examines as follows:

1.   The effect  of gross domestic  product  on non-performing  loans  in Nigerian  Banking

Industry.

2.   The effect of inflation on non-performing loans in Nigerian Banking Industry.

3.   The effect of total loans and advances of Banks on non-performing  loans in  Nigerian

Banking Industry.

4.   The  effect  of  total  assets  of  Banks  on  non-performing  loans  in  Nigerian  Banking

Industry.

5.   The  effect  of  banks’  lending  Rates  on  non-performing  loans  in  Nigerian  Banking

Industry.

1.4      Research Questions

The research questions for this study are as follows:

1.   To  what  extent  is  the  effect  of  gross  domestic  product  on non-performing  loans  in

Nigerian Banking Industry?

2.   To  what  extent  is  the  effect  of  Inflation  rate  on  non-performing  loans  in  Nigerian

Banking Industry?

3.   How far is the effect of total loans and advances of Banks on non-performing loans in

Nigerian Banking Industry?

4.   To what extent is the effect of total assets of Banks on non-performing loans in Nigerian

Banking Industry?

5.   How far does the bank’s lending rate affect non-performing loans in Nigerian Banking

Industry?

1.5      Research Hypotheses

The Hypotheses for this study are stated in their null form as follows:

1. Gross domestic product does not have a positive and significant effect on non-performing loans in Nigerian Banking Industry.

2. Inflation rate does not have a positive and significant effect on non-performing loans in

Nigerian Banking Industry.

3. Total loans and advances of Banks do not have a positive and significant effect on non- performing loans in Nigerian Banking Industry.

4. Total assets of Banks do not have a positive and significant effect on non-performing

loans in Nigerian Banking Industry.

5. Bank’s lending does not have a positive and significant impact on non-performing loans in Nigerian Banking Industry.

1.6      The Scope of the Study

The period of study covered Twenty One years starting from the year 1993 – 2014. The nature of this empirical research work demands the coverage of all licensed Commercial banks in Nigeria. The choice of the base year was because this period witnessed major landmarks in the banking terrain  towards  the  end  of  the  last  century,  and  the  government  transition  from  Military government to usher in the third republic democracy era in 1999. It was in 1999 also that the Universal Banking Policy was introduced in the Nigerian banking history.

The merchant banks and the commercial banks were merged to a common level business playing ground.  The  reform  marked  the  beginning  of  bigger  banks  and  also  competition.  Another justification  considered  for  the  choice  of this  period  is  that  it  covered  a period  from  pre- consolidation  (1993-2004) to post-consolidation  (2005-2014)  and clearly showed the trend of activities in the industry. For example, the pre-consolidation shows 89 licensed banks  in Nigeria that were consolidated into 24 banks and by the end of 2014, the number of banks had reduced further to 22 banks.

The period  of study witnessed  the  global  financial  crisis which  started  from  late 2007  and reached its peak in 2008 with negative  impacts recorded  most in 2009. This study will give emphasis of how the banks reacted to the shocks of the crisis. Previous study showed that strong global economies gradually was drifting into recession especially the United States of America and Europe, emerging economies like Nigeria was near collapse but it survived.

1.7      The Significance of the Study a)  Academia

I have known that in every risk asset created by a bank, there is a foreseen risk of non-repayment

before the loan will finally become non-performing and impact negatively on the bank. A bank that has a very high appetite for profit usually relaxes her risk management policies to increase its  risk  asset  portfolio.    Therefore,  to  overcome  the  risk  of  non-performing  loans,  every borrowing must be supported with adequately and acceptable collateral  values. The causes of Non-Performing Loans have been attributed to many factors by researchers who have applied various methodologies both descriptive and quantitative to arrive at their conclusions which have shown conflicting results. This study is very significant because the dynamic nature of the global economies justifies the need for constant research.

b)  Policy Makers/Regulators

The  study  of  Non-Performing  Loans  determinants  which  considers  other  macroeconomic indicators  and  banks-specific  variables  give  credence  to  greater  significance  for  all  Policy makers and regulators within the Financial System to take appropriate actions that will mitigate the rising  level of non-performing  loans  in the  banks. The  study will be  significant  to  the regulatory  bodies   like  the  Central  Bank   of  Nigeria  (CBN),   Nigeria   Deposit   Insurance Corporation  (NDIC),  Securities  and  Exchange  Commission  (SEC), Nigerian Stock Exchange (NSE), National Board for Micro finance Bank (NBMFB), the Chartered Institute of Bankers of Nigeria, the Institute of Chartered Accountants of Nigeria (ICAN), the Association of National Accountants  of  Nigeria  (ANAN),  the  Nigerian  Institute  of  Management  (NIM)  and  other Professional bodies, according to the guidelines establishing them.

c)  Private Sector Borrowers

Lending  and  borrowing  is the core business  of any Money  Deposit  Bank.  This  function  is extended to all the sectors of the economy. Most often, banks become averse to further lending despite high demand from borrowers and expected high interest income. The borrowers may not understand  the rationale for such adverse reactions  from their bankers,  which have been due largely to very high non-performing loans. Therefore, the findings from this thesis will be useful to the various private sector borrowers such as the Manufacturers, Traders, Transporters, players in  the  Oil  &  gas  sub-sector,  Airlines  and   Aviation  operators,  Multinationals,   Importers, Exporters, Agriculture, Maritime Agencies, Private investors in real estates and, Capital Markets in terms of understanding how their inability to repay borrowed funds from banks will affect the entire financial system stability.

d)  Bank Risk Asset Management Executives

In Nigeria, studies have shown that Risk Management Practices which is one of the major tools to hedge against asset quality depletion is still at its rudimentary stage (Moghalu, 2013). This is evidenced  by the lax implementations  of Basel 1, and 11, while Basel 111  is already being implemented by other global economies. Thus the findings will be significant to the formulation of Banks Risk Asset Management Policies, and enforce best International Practices. Advanced Loans treatments such as Loan negotiations, Loan sales, Loan derivatives and securitization will be better understood and implemented. The compliance to various statutory laws like the Bank and Other Financial Institutions Act (BOFIA), the Company and Allied Matters Act (CAMA), and Banks Code of Corporate Governance, will be strictly adhered to in considerations of their systematic implications to the balance sheets of the banks and the economy whenever the laws are breached. The study is significant as it will identify, analyze and show how to mitigate the various risk types (Credit, Operational, Reputational, Liquidity, Market and Human Resources) risks. Other risk types are customer satisfaction risk, leadership risk, information technology risk, regulatory risk, industry risk,  government  policies risk, sovereign risk, competition  risk,  and fraud risk.

The study is significant  as it will expose the major challenges facing the banks in her  loan administrations  and control. Such challenges  identified  is the dearth of professionals  and the absence of strategic partnerships and alliances  with local and global professional  bodies like Credit  Risk  Management  Association  of  Nigeria  (CRIMAN),  Global  Association  of  Risk Professionals  (GARP); the Institute of Risk Management  (IRM) in  the United  Kingdom, and “The International Association of Risk and Compliance  Professionals (IARCP)” in the United States which creates skill and capacity gaps.

e)  Policy Enforcement Authorities

The post consolidation era witnessed a restructuring and reclassification of most non-performing loans into performing status for a period within the next financial year.   The Asset Management Corporation of Nigeria (AMCON) was established among other objectives, to manage the Non- Performing Loans. The delay in the implementation of the functions of the Asset Management Corporation of Nigeria caused the already restructured  and reclassified Loans that were for a short period to deteriorate again. The effect  impacted  negatively on the balance sheet of the banks and it threatened the financial stability of the economy. The global financial crises that coincided  with this development  stood as a lesson to all. The significance  of this study will ensure that future occurrence will be held under control.

f)   Government

The study will be significant at this period of globalization where the United States of America, Canada, Europe, World Bank, International  Monetary Fund (IMF), and other  world financial blocs like the BRICS (Brazil, Russia, India, China and South Africa) battles with regional and global financial crises, the various levels of government might intervene to rescue the financial system by considering packaging economic financial stimulus to the citizenry through lowering lending rates, releasing more public sector funds to the banks for onward lending to borrowers, buying over the ‘toxic assets’ of the banks, thus, releasing much needed liquidity to the banks and moderating the impact of the harsh global economic and financial crises, or injecting much needed Capital to the ailing bank.



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DETERMINANTS OF NON-PERFORMING LOANS (NPLS) IN EMERGING ECONOMIES EVIDENCE FROM NIGERIAN BANKING INDUSTRY

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