Article History

The banking system, which has been the fulcrum of funding for Nigeria’s economy, is plagued by instability in the face of a growing amount of non-performing loans. This is examined in the current milieu of the need for funding the Sustainable Development Goals (SDGs). Using a number of proxies for SDGs 8 and 9, annual time series data covering 1992 to 2019 were used with variables such as GDP per capita, commercial banks’ loans to small-scale enterprises, banking system stability indicators and liquid assets to total assets of banks. The study utilized the Autoregressive Distributed Lag. Findings showed that banking system stability has a significant positive effect on funding the SDGs 8 and 9 beyond the five per cent level of significance within the study period. Non-performing loans remained negative throughout the study. The result suggests that banking stability would enhance funding of the SDGs, and banks would be stable if they finance the SDGs. The policy implication explains the importance of banks actively pursuing opportunities to build sustainable enterprises and developing strategies that will enable their core banking business to be more venture-driven rather than consumer-oriented. In conclusion, there is a need to completely eliminate or reduce the quantum of non-performing loans from the system and establish a regulatory framework that will facilitate its expected role of intermediation in the economy profitably and successfully. AcknowledgmentThe authors would like to appreciate Covenant University for financial support to publish this paper.

This study examined the stabilization effect of fiscal policy on banking system stability in Nigeria using data from 1985 to 2019. The study adopted the ordinary least squares, cointegration and error correction techniques to analyze and determine the existence of a long-run relationship among the variables. The ordinary least squares technique was used to evaluate the impact of the interaction between fiscal policy and banking system stability variables. The findings indicate that fiscal policy has a strong influence on banking system stability in Nigeria. It was further discovered that, among the fiscal policy variables, taxation and government debt have a more positive effect on banking systems than other variables used in the study, while government funding and debt growth have a negative effect on banking system stability. This indicates that the more debt the government accumulates, the greater the instability of the banking system. The study recommends that the government put appropriate controls in place to avoid borrowing that will creep into deficit, which will, in turn, affect the banking system stability. The government should also ensure that its borrowings are channeled into productive segments of the economy to enhance the sustainable repayment of debt and ensure that the mechanisms for debt repayment are strictly adhered to.