– Bank Specific Attributes and Off-Balance Sheet Activities of Quoted Deposit Money Banks in Nigeria –
Download Bank Specific Attributes and Off-Balance Sheet Activities of Quoted Deposit Money Banks in Nigeria project materials: This project material is ready for students who are in need of it to aid their research.
ABSTRACT
This study assesses the relationship between Bank Specific Attributes and Off-balance Sheet Activities of Quoted Deposit Money Banks in Nigeria for a period of 6 years (2009-2014).
The sample comprised of the 9 deposit money banks quoted on the Nigerian Stock Exchange as at 31 December, 2014.
Secondary data was from the financial statements and the stock exchange Fact Book of quoted companies in Nigeria. A correlational research design was used in the study.
Multiple regression techniques was employed as a tool of analysis. The bank-specific attributes are credit risk, liquidity risk, profitability, capital adequacy and size.
The findings revealed a positive and significant relationship of liquidity risk, profitability, capital adequacy, and bank size on off-balance sheet activities while credit risk had a negative and insignificant effect on off-balance sheet activities.
The study concluded that four out of the five explanatory variables; liquidity risk, profitability, capital adequacy, and bank size have relationship with the off balance sheet activities of Nigerian quoted deposit money banks while one has none.
Therefore, it is recommended among others that the policy makers should pay attention to these activities and monitor their use, incentives should be there to develop derivatives to manage the increasing liquidity risk and lastly, profitability, capital adequacy and size should be enhanced positively.
INTRODUCTION
In recent decades, banking deregulation, technological changes, financial deepening and innovation have to lead to a more market-oriented structure where firms greater than ever relying on the financial market to fund their investments.
This change cut across most financial markets especially in Canada, US, Europe, Asia and in different places around the world (Calmes & theoret, 2010; Calmes, 2004; Roldos, 2006).
The resulting outcome is major change in corporate financing characterized by relative cut in the share of bank loan and increased share of bonds and stocks.
The transformation is challenging banking business and justified, in part, with the financial deregulation where banks are increasingly allowed to act as security dealer and to offer fiduciary services and portfolio advice to investors.
In addition to traditional practices, banks also begin to securitize loans, trade in financial instruments such as guarantees, commercial papers, acceptances, letters of credit, performance bonds,
indemnities that are more in line with financial deepening process. These non tradition activities are loosely seen as off balance sheet activities.
REFERENCES
Angelidis, D. & Lyroudi, K. (2005): “The Magnitude of Off-Balance Sheet Activities for the Valuation of Banking productivity”, Working Paper, International Conference on Finance, Copenhagen-Denmark, Sept. 2-4.
Anthony, M. (2008): “Commercial Bank Risk Management: An Analysis of the Process.” Financial Institute Centre, Wharton School.
Ashcraft, B & Schuermann, T. (2008): “Understanding the Securitization of Subprime Mortgage Credit.” Federal Reserve Bank of New York Staff Report No. 318.
Barrel, R., Davis, E., Liadzec, I. & Karima, D. (2012): “Off-Balance Sheet Exposures and Banking Crises in OECD Countries.” Economics and Finance Working Paper: Brunel University.
Basel Committee on Banking Supervision (1999): “Principles for the Management of Credit Risk.” CH- 4002 Basel, Switzerland Bank for International Settlements
Bennett, B. (1986): “Off Balance Sheet Risk in Banking in the case of Standby letter of Credit.” Economic Review, Federal Reserve Bank of San Francisco, 19-29.
Be the first to comment