Banking system stability: A prerequisite for financing the Sustainable Development Goals in Nigeria

Abstract

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.

Дослідження Особливостей Функціонування Банківської Системи В Умовах Воєнного Стану

“…Keywords: banking institution, banking system, banking activity, martial law, analysis of banking activity Цифрові технології в сучасному світі змінюють багато аспектів нашого життя, включаючи функціонування банківської системи [4][5][6][7]. У контексті України, особливо під час військового стану, роль цифровізації стає ще важливішою.…”

The Role of the Credit Services Market in Ensuring Stability of the Banking System

“…The results of the research made by Amadi et al [13] show that bank stability will increase the funding of the SDGs, and banks will be stable if they finance the SDGs. The authors prove the importance of the banks' active use of opportunities to create sustainable enterprises and develop strategies.…”

The criticality of credit recovery in banking system stability: A GMM estimation

“…Banks lend to as many borrowers as possible, mainly to increase their asset level. Regardless of the reasons and the number and quality of the borrowers at the point of granting the facility, the bank will become bankrupt if it fails to practice proper credit management or take prompt recovery action against borrowers at the earliest event of a default (Amadi, Adetiloye, Babajide, & Amadi, 2021;Baselga-Pascual, Trujillo-Ponce, & Cardone-Riportella, 2015).…”