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Determinants of Commercial Banks¡¯ Lending Behavior in Nigeria

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  • Felicia Omowunmi Olokoyo

Abstract

This study investigated the determinants of commercial banks¡¯ lending behaviour in the Nigerian context. The study aimed to test and confirm the effectiveness of the common determinants of commercial banks lending behaviour and how it affects the lending behaviour of commercial banks in Nigeria. The model used is estimated using Nigerian commercial banks loan advance (LOA) and other determinants or variables such as their volume of deposits (Vd), their investment portfolio (Ip), interest (lending) rate (Ir), stipulated cash reserve requirements ratio (Rr) and their liquidity ratio (Lr) for the period; 1980 ¨C 2005. The model hypothesizes that there is functional relationship between the dependent variable and the specified independent variables. From the regression analysis, the model was found to be significant and its estimators turned out as expected and it was discovered that commercial banks deposits have the greatest impacts on their lending behaviour. The study then suggests that commercial banks should focus on mobilizing more deposits as this will enhance their lending performance and should formulate critical, realistic and comprehensive strategic and financial plans.

Suggested Citation

  • Felicia Omowunmi Olokoyo, 2011. "Determinants of Commercial Banks¡¯ Lending Behavior in Nigeria," International Journal of Financial Research, International Journal of Financial Research, Sciedu Press, vol. 2(2), pages 61-72, July.
  • Handle: RePEc:jfr:ijfr11:v:2:y:2011:i:2:p:61-72
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    File URL: http://www.sciedu.ca/journal/index.php/ijfr/article/view/309/147
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    File URL: http://www.sciedu.ca/journal/index.php/ijfr/article/view/309
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    References listed on IDEAS

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    1. Ongena, Steven & Smith, David C., 2000. "What Determines the Number of Bank Relationships? Cross-Country Evidence," Journal of Financial Intermediation, Elsevier, vol. 9(1), pages 26-56, January.
    2. Carletti, Elena & Cerasi, Vittoria & Daltung, Sonja, 2007. "Multiple-bank lending: Diversification and free-riding in monitoring," Journal of Financial Intermediation, Elsevier, vol. 16(3), pages 425-451, July.
    3. Hans Degryse & Nancy Masschelein & Janet Mitchell, 2004. "SMEs and Bank Lending Relationships: the Impact of Mergers," Working Paper Research 46, National Bank of Belgium.
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    Cited by:

    1. repec:ora:jrojbe:v:3:y:2018:i:2:p:43-51 is not listed on IDEAS
    2. Serpil TOMAK, 2013. "Determinants of Commercial Banks’ lending Behavior: Evidence from Turkey," Asian Journal of Empirical Research, Asian Economic and Social Society, vol. 3(8), pages 933-943, August.
    3. repec:asi:joabsj:2019:p:10-28 is not listed on IDEAS

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