Factors affecting non-performing loans in commercial banks of selected West African countries
This paper examines the macro-economic and bank-specific factors affecting non-performing loans in commercial banks. Using 47 listed commercial banks from six countries, namely 19 banks from Nigeria, 14 banks from Benin, 3 banks from Burkina Faso, 3 banks from Gambia, 3 banks from Guinea, and 5 bank...
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| Format: | Article |
| Language: | English |
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LLC "CPC "Business Perspectives"
2022-01-01
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| Series: | Banks and Bank Systems |
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| Online Access: | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/16063/BBS_2022_01_Msomi.pdf |
| _version_ | 1818368362465460224 |
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| author | Thabiso Sthembiso Msomi |
| author_facet | Thabiso Sthembiso Msomi |
| author_sort | Thabiso Sthembiso Msomi |
| collection | DOAJ |
| description | This paper examines the macro-economic and bank-specific factors affecting non-performing loans in commercial banks. Using 47 listed commercial banks from six countries, namely 19 banks from Nigeria, 14 banks from Benin, 3 banks from Burkina Faso, 3 banks from Gambia, 3 banks from Guinea, and 5 banks from Liberia for the period 2008 to 2019, fixed and random effect model was used. The Hausman test favored the selection of fixed effect model, and it was found from the estimation that the liquidity ratio, capital adequacy ratio and inflation rate significantly affect non-performing loans. As a result, it is advised that banks depend not only on their ability to achieve the capital adequacy ratio, but also guarantee that loans are thoroughly scrutinized before being issued to beneficiaries. Bank managers should guarantee that banking staff is not simply awarding loans to secure their jobs by accumulating deposits from consumers at the price of the bank’s long-term stake. In addition, the economies of West Africa should keep their inflation rates low so that repayment of loans on time is cheap and realistic.
AcknowledgmentI would like to appreciate Fezile Nonjabulo Gcwabaza for love and support throughout this research project. |
| first_indexed | 2024-12-13T23:06:45Z |
| format | Article |
| id | doaj.art-abefe95596e04bdc9d130db00f3f6a25 |
| institution | Directory Open Access Journal |
| issn | 1816-7403 1991-7074 |
| language | English |
| last_indexed | 2024-12-13T23:06:45Z |
| publishDate | 2022-01-01 |
| publisher | LLC "CPC "Business Perspectives" |
| record_format | Article |
| series | Banks and Bank Systems |
| spelling | doaj.art-abefe95596e04bdc9d130db00f3f6a252022-12-21T23:28:16ZengLLC "CPC "Business Perspectives"Banks and Bank Systems1816-74031991-70742022-01-0117111210.21511/bbs.17(1).2022.0116063Factors affecting non-performing loans in commercial banks of selected West African countriesThabiso Sthembiso Msomi0https://orcid.org/0000-0003-3941-6815Master of Accounting, Ph.D. Student, Lecturer, Faculty of Accounting and Informatics, Department of Management Accounting, Durban University of TechnologyThis paper examines the macro-economic and bank-specific factors affecting non-performing loans in commercial banks. Using 47 listed commercial banks from six countries, namely 19 banks from Nigeria, 14 banks from Benin, 3 banks from Burkina Faso, 3 banks from Gambia, 3 banks from Guinea, and 5 banks from Liberia for the period 2008 to 2019, fixed and random effect model was used. The Hausman test favored the selection of fixed effect model, and it was found from the estimation that the liquidity ratio, capital adequacy ratio and inflation rate significantly affect non-performing loans. As a result, it is advised that banks depend not only on their ability to achieve the capital adequacy ratio, but also guarantee that loans are thoroughly scrutinized before being issued to beneficiaries. Bank managers should guarantee that banking staff is not simply awarding loans to secure their jobs by accumulating deposits from consumers at the price of the bank’s long-term stake. In addition, the economies of West Africa should keep their inflation rates low so that repayment of loans on time is cheap and realistic. AcknowledgmentI would like to appreciate Fezile Nonjabulo Gcwabaza for love and support throughout this research project.https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/16063/BBS_2022_01_Msomi.pdfcommercial bankscredit riskeconomic growthnon-performing loansWest Africa |
| spellingShingle | Thabiso Sthembiso Msomi Factors affecting non-performing loans in commercial banks of selected West African countries Banks and Bank Systems commercial banks credit risk economic growth non-performing loans West Africa |
| title | Factors affecting non-performing loans in commercial banks of selected West African countries |
| title_full | Factors affecting non-performing loans in commercial banks of selected West African countries |
| title_fullStr | Factors affecting non-performing loans in commercial banks of selected West African countries |
| title_full_unstemmed | Factors affecting non-performing loans in commercial banks of selected West African countries |
| title_short | Factors affecting non-performing loans in commercial banks of selected West African countries |
| title_sort | factors affecting non performing loans in commercial banks of selected west african countries |
| topic | commercial banks credit risk economic growth non-performing loans West Africa |
| url | https://www.businessperspectives.org/images/pdf/applications/publishing/templates/article/assets/16063/BBS_2022_01_Msomi.pdf |
| work_keys_str_mv | AT thabisosthembisomsomi factorsaffectingnonperformingloansincommercialbanksofselectedwestafricancountries |