Nigerian Journal of Banking and Financial Issues (NJBFI)

Post-Covid-19 Pandemic And Banking System In Nigeria

Abstract

The investigation on the effect of Post COVID-19 pandemic on banking system in Nigeria was carried out by this study. Quarterly time series data spanning from 2018 to 2021 formed the basis of the investigation. The analytical methods employed in this study encompassed the Augmented Dickey-Fuller Unit Root Test, ARDL Bound Test, and various post-estimation tests. The findings of this study revealed that both the number of COVID-19 cases and lockdown status had a significant negative influence on the total assets of banks in the long run. Specifically, COVID-19 cases exhibited a negative yet insignificant effect on liquidity and the loan-to-deposit ratio in the banking sector, while lockdown status significantly impacted bank liquidity. Moreover, lockdown status demonstrated a negative and significant effect on the loan-to-deposit ratio in the banking sector, both in the short and long run. In conclusion, the study suggests that the COVID-19 pandemic has repercussions on the performance of deposit money banks in Nigeria. Consequently, it is recommended that the Central Bank of Nigeria ensures vigilant monitoring of the liquid assets of deposit money banks. Furthermore, there should be regular assessments and reviews of the asset portfolios of deposit money banks by the Central Bank of Nigeria to manage banks' exposure to excessive risk and safeguard depositors' funds, especially during economic downturns. The Central Bank of Nigeria is also advised to introduce a standardized approach to loans, ensuring the effective mobilization of funds to qualified applicants while implementing controls to address loan defaults and maintain the stability of the country's financial system.