Original Research Article | OPEN ACCESS
Impairment Charges and Performance of Deposit Money Banks in Nigeria

C. Akonye1 E. I. Okoye

Department of Accountancy, Nnamdi Azikiwe University Awka, Nigeria;

For correspondence:-  C. Akonye   Email: akonyechinazu@gmail.com

Received: September 7, 2019        Accepted: September 21, 2019        Published: September 30, 2019

Citation: Akonye C.Okoye EI. Impairment Charges and Performance of Deposit Money Banks in Nigeria. Account Tax Rev 2019; 3(3):105-120 doi:

© 2019 The authors.
This is an Open Access article that uses a funding model which does not charge readers or their institutions for access and distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0) and the Budapest Open Access Initiative (http://www.budapestopenaccessinitiative.org/read), which permit unrestricted use, distribution, and reproduction in any medium, provided the original work is properly credited..


This study investigates the effect of impairment charges on performance of Deposit Money Banks (DMBs) in Nigeria. Specifically, the objectives of this study are to ascertain the effect of Loan impairment charges (LIC) and non-loan impairment charges (NLIC) on performance of (DMBs) in Nigeria. The study adopted the ex-post facto research design using the Panel regression Data technique.  The study made use of secondary data obtained from the Nigeria Stock Exchange Fact books and Annual reports & accounts of the eight (8) sampled DMBs.  A sample of eight (8) Domestic Systemically Important Banks (D-SIBs) based on Central Bank of Nigeria (CBN) ranking were selected using the purposive sampling technique from a population of sixteen (16) DMBs whose shares were listed in the Nigeria Stock Exchange as at December 31, 2018. The study hypotheses were tested using the Panel Least Square (PLS) regression, Granger Causality test and Hausman test with the aid of E-View 9.0 statistical software. Our findings revealed that impairment charges (both Loan & Non-Loan impairment charges) have significant negative effect on Earnings Per Share of (DMBs) in Nigeria. This study concluded that bothloan impairment charges and non-loan impairment charges occur due to weak credit monitoring policy by Deposit Money Banks in Nigeria. The study recommends that Deposit Money Banks should beef up their credit control and monitoring policies in order to minimize heavy impairment charges which adversely affect the banks’ performance. Also, Deposit Money Banks should design and implement their own internal prudential guidelines with shorter periods for detection of early warning signals on loans and non-loan exposures as a means of self-regulation for improved performance.

Keywords: Governance, Regulation, Impairment Charges, Domestic Systemically Important Banks.

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