DETERMINANTS OF NON-PERFORMING LOANS IN QOUTED DEPOSIT MONEY BANKS IN NIGERIA

Following the global financial crisis of2007- 2009, the regulatory authorities in Nigeria initiated banking reform that led to establishment of Asset Management Corporation in 2010 to purchase non-performing loans in the Deposit Money Banks. This study is an empirical assessment of the influence of the purchase of non-performing loans by Asset Management Corporation of Nigeria, bank-specific and macroeconomic factors on non-performing loans in quoted Deposit Money Banks in Nigeria. The objective of the study is to assess whether or not the purchase of the non­ performing loans by the Asset Management Corporation, bank-specific and macroeconomic factors have significant influence on the non-performing loans in quoted Deposit Money Banks. The study use banking and economic data for a panel of fourteen banks quoted on the Nigerian Stock Exchange over the period2010-2013. Using dynamic panel data econometric technique, the study finds no evidence that indicate that the purchase of non-performing loans by Asset Management Corporation, bank size and real gross domestic growth rate have significant influence on non- performing loans, as they are insignificantly related to non-performing loans. However, this study finds significant influence ofprofit after tax and capital of deposit money banks on non­ performing loans. This study therefore recommends strong corporate governance and adequate risk management practices through effective credit administration and supervision as well as an effective judicial system that protect creditors' right.