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ABSTRACT
The study empirically examined the relationship between non-performing loans and economic growth in Nigeria for the period 1995 to 2021. In order to have a more robust analysis of the purported impact of non-performing loans related factors on economic growth, the fully modified ordinary least square econometric technique was employed. The results derived from the analysis of data revealed that capital adequacy ratio (CADR) and loan and advances (LAA) play significant roles in the growth of the Nigerian economy. Non-performing loans (NPL) has significant negative relationship with economic growth in Nigeria; loan loss provision (LLP) and interest rate (INTR) have insignificant impact on economic growth, meaning that the amount of loan loss provision and the level of interest rate do not play significant role in the growth of the Nigerian economy. The study recommends among others that, as it relates to non-performing loans, since it has a significant negative impact on economic growth shows that there is still more to worry about by management monetary authority, cases of non-performing loans still abound is some deposit money banks in the country. Therefore, management should be deliberate and more decisive in taking actions on erring credit officers who often compromise the credit system for their selfish gains at the detriment of the banks. Also, loans’ recovery drive should be their watch wall and this must be carried out by current state of the art strategy as it is done in the more technological advanced economies of the world.
