Banking and Finance - Scholarly Publications

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Browsing Banking and Finance - Scholarly Publications by Subject "Domestic Debt"

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    Open Access
    How Domestic Debt Hurts Bank Performance:
    (2012-12) Obademi, O.E
    This study focuses on the interplay of domestic debt and bank performance and thus an attempt has been made to investigate the long-run relationship and direction of causality of the impact of domestic debt on bank performance using different variables herein the earnings per share, return on equity and return on capital employed. The banks used are the First Bank of Nigeria Plc, United Bank for Africa Plc being the two banks with huge penetration in the Nigerian banking industry. A general model for the micro analysis was developed with ample support of a macro model with the background of a simultaneous equation and further use of vector auto-regression estimation procedure. The result of the analysis shows that domestic debt impairs bank performance but the direction of impact on the two banks varies. While domestic debt impacts most negatively on the return on equity of First Bank Plc followed by its earnings per share, for United Bank for Africa domestic debt impacts most negatively on return on capital employed followed by its return on equity. It is believed that though domestic debt can be used as an instrument of economic stabilization, nonetheless, care must be taken to avoid a situation whereby it makes the business environment unfriendly.
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    Open Access
    A Macro Analysis of Bank Performance in Debt-Burdened Countries: The Case of Nigeria
    (2013) Obademi, O.E
    'in this study the focus is on the long-run relationship and impact of public debt on banking industry performance i.e. a macro-analysis in Nigeria using different performance indices such as total bank lending, total bank deposit and total bank branches between the period I975-2005. A general macro model underpinned by a simultaneous equation using a vector auto-regression estimation approach was done: with the objective of sensitising countries on the need for caution on public debt. The findings arc that public debt impacts negatively on bank performance but the extent of Impact IS different on die variables chosen in this study. The analysis carried out show that domestic debt Impacts most negatively on total bank lending while external debt:impacts most negatively on total bank deposit. It IS believed that though domestic debt can be used as an instrument of economic stabilization. nonetheless. in the choice of whether to U!)C demesne debt or external debt it may be: more expedient to use external debt based on the outcome of this study though it should be slated that in doing that still, adequate care must be taken to maintain an acceptable Debt GDP ratio needed for debt sustainability.