Effect of Asset Quality on Non-Interest Income of Deposit Money Banks in Nigeria.
- Author Adeyemi, Ogundipe
- Co-Author Abimbola, Cole; Folorunsho, Akande; & Olukayode, Fasola.
- DOI http://wwj
- Country : Nigeria
- Subject : Finance
Keywords : Assets quality, loan loss provision, non-interest income and non-performing loans.
Abstract
In recent years, Deposit Money Banks in Nigeria have intensified efforts towards improving their level of earnings while at the same time reducing reliance on interest income generated from granting of loans and advances being the highest source of revenue income for continuing sustainability. However, most of the studies on net interest incomes/margins are based on developed countries data and banks specific variables. The study examined the effects of assets quality on non-interest income performance of ten largest (10) banks quoted in Nigeria Stock Exchange using secondary data sourced from the annual reports of these banks, Central Bank of Nigeria Annual Accounts and Statistics for twelve (12) years (2007 – 2018). Data collected for the study were subjected to pre-tests and analysed using summary statistics, correlation, unit root tests, co-integration test, descriptive and inferential statistics. The study findings revealed that assets quality had significant effect on the non-interest income of deposit money banks in Nigeria non-interest income (Adj.R2 = 0.212, F (9, 96) = 3.548, p < 0.05). The study concluded that asset quality affected the non-interest income of deposit money banks in Nigeria and banks can perform better in terms of earning non-fee-based income instead of depending mainly on interest on loans and investment alone to sustain assets quality, preservation, and growth.
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