EXCHANGE RATE VOLATILITY AND BANK PERFORMANCE IN NIGERIA
Journal Title: Asian Economic and Financial Review - Year 2013, Vol 3, Issue 2
Abstract
This study investigated the impact of unstable exchange rate on bank performance in Nigeria using two proxies for bank performance, namely loan loss to total advances ratio and capital deposit ratio. Government expenditure, interest rate, real gross domestic product were added to exchange rate as independent variables. The two models specified show that the impact of exchange rate on bank performance is sensitive to the type of proxy used for bank performance. Loan loss to total advance ratio shows that fluctuating exchange rate may affect the ability of lenders to manage loans resulting into high level of bad loans while capital deposit ratio does not have significant relationship with exchange rate. A core recommendation of this study is that a stable exchange rate is needed to improve the ability of the banking sector to channel credit to the economy.
Authors and Affiliations
Owoeye Taiwo| Department of Economics, Faculty of the Social Sciences, Ekiti State University, Nigeria, Ogunmakin Adeduro Adesola| Department of Accounting, Faculty of Management Sciences, Ekiti State University, Nigeria
Keywords
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