Asset Management Corporation (AMCON) and Performance of Deposit Money Banks in Nigeria

Abstract

Asset Management Corporation of Nigeria (AMCON) is established for the purpose of acquiring the Non-Performing loans (NPLs) of banks with a view to freeing such banks from the burden of provisioning requirements – Substandard, doubtful and lost accounts. The main objective of this study is to examine the effect of asset management corporation (AMCON) on the performance of deposit money banks in Nigeria. Specifically, the study investigate the effect of non performing loan on the performance of deposit money banks in Nigeria; examine the effect of capital adequacy ratio on the performance of deposit money banks in Nigeria and assess the effect of average liquidity ratio of deposit money banks in Nigeria on the performance of deposit money banks in Nigeria. The study adopted an ex-post facto research design because the data for the study are secondary data which were generated from Central Bank of Nigeria Statistical Bulletin. Econometric techniques involving descriptive statistics, Augmented Dickey Fuller tests for Unit Roots and the Ordinary Least Square (OLS) were used for the data analysis. The regression result indicates that nonperforming loan of deposit money banks has negative and insignificant effect on return on equity while capital adequacy ratio of deposit money banks and average liquidity ratio of deposit money banks has significant effect on return on equity. The study thus concludes that asset management corporation has positive effect on return on equity and has improved the performance of Deposit money Banks in Nigeria. Amongst the recommendations is that managers of deposit money banks should from time to time sensitize customers with regard to nonperforming loan of deposit money banks, its risk exposure, trainings should be held for bank staff in short periods to acquaint them with modern developments of the danger in nonperforming loan of deposit money banks to improve the performance of deposit money banks in Nigeria. Managers of deposit money banks should strive toward the improvement of capital adequacy ratio to enhance the performance of deposit money banks and that mangers of deposit money banks can offers numerous products and services through average liquidity ratio of deposit money banks in an effective, efficient and cost effective manner to their customers that will improve the performance of deposit money banks in Nigeria.