Financial system instability is detrimental to the economy and is caused by multiple factors with complex dynamics such as, global imbalances, market liberalisation, under regulation/supervision, poor macroeconomic policies, poor corporate governance, insufficient transparency, moral hazards and irrational exuberance.
While financial system stability is one of the core mandates of central banks around the world, regulatory agencies around the world became more strategically sensitive in the aftermath of the 2008-2009 global financial crisis. Deputy governor, Economic Policy, CBN, Kingsley Obiora had affirmed the stability of the Nigerian banking industry as he said, the banking system remains sound, safe, and resilient. According to him, industry Non-performing Loans had decreased from 4.9 per cent in December 2021 to 4.2 per cent in December 2022, which was below the maximum prudential requirement of 5.0 per cent.
“As a result, total gross credit increased by N5.14 trillion or 20.93 per cent between the end of December 2021 and December 2022, from N24.57 trillion to N29.72 trillion, due to the increase in the industry funding base as well as the CBN’s directive on LDR, which has encouraged banks to increase lending to the real sector of the economy, and business strategy and competition.
Hmmm I hope the analysis is true with non performing loan in the industry or better still is accurate used for cbn analysis