IMPACT OF DEBT MANAGEMENT ON THE PERFORMANCE OF DEPOSIT MONEY BANK IN NIGERIA

Abstract

This study investigated the effect of debt management on the performance of deposit money banks in Nigeria. The study covered the period 2005-2023. The specific objectives were: to ascertain the effect of nonperforming loans on the performance ofdeposit money banks in Nigeria, to examine the effect of ratio of nonperforming loan to total loans on the performance of deposit money banks in Nigeria, and to examine the effect of bad debt provision on the performance of deposit money banks in Nigeria. The study adopted ex post facto research using time series data on the debt management variables. The major findings of the study revealed that: non-performing loans has negative significant effect on the performance of deposit money banks in Nigeria, ratio of nonperforming loans to total loans revealed to have negative and insignificant effect on the performance of deposit money banks in Nigeria and the bad debt provision revealed to have positive significant effect on the performance of deposit money banks in Nigeria. The study concluded that debt management had mixed effect on the performance of the banks during the period 2005-2023 in Nigeria. Based on the findings, the study recommended that banks should adopt a coordinated credit recovery scheme to reduce the effect of the non-performing loans on the banks; the banks should sustain the bad debt provision as it will free up more capital available for other bank credit operations and enhance performance; and the bank should ensure to reduce the nonperforming loans to total loans ratio order to enhance the credit rating of the banks and reduce the effect of the nonperforming loans.