📄 Abstract
This study examines the relationship between asset quality indicators and the financial performance of deposit money banks (DMBs) in Nigeria, focusing specifically on non-performing loan ratio (NPLR) and total loan ratio (TLR) as determinants of profitability growth rate (PGR). Using a balanced panel dataset comprising ten DMBs over a ten-year period (20142023), the study employs descriptive statistics, correlation analysis, and fixed-effect panel regression to test the hypothesized relationships. The results reveal that non-performing loan ratio has a negative and statistically significant effect on profitability growth rate (ß = -0.642, p < 0.01), indicating that increased credit defaults substantially reduce banks' ability to grow earnings. Conversely, total loan ratio demonstrates a positive and significant effect on profitability growth rate (ß = 0.212, p < 0.05), suggesting that efficient loan portfolio expansion enhances bank performance. The findings have important implications for credit risk management practices and strategic asset allocation in Nigerian banking sector. The study recommends that bank management prioritize credit risk control mechanisms, optimize loan portfolio composition, and strengthen credit appraisal processes to sustain profitability growth.
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📚 How to Cite:
Adewale. O. TAIWO (PhD), Abiodun Tejumade LAWAL , ASSET QUALITY AND FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA: THE ROLE OF NON-PERFORMING LOANS AND TOTAL LOAN RATIOS , Volume 13 , Issue 3, March 2026, EPRA International Journal of Economics, Business and Management Studies (EBMS) ,