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The anatomy of banking firm financial condition

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  • Jonathan Njoku
  • Eno L. Inanga

Abstract

This study employs factor analysis to develop a conceptual model of bank financial condition from financial ratios and other characteristics in Nigerian banking. It paints the anatomy of the phenomenon in a conceptual model around the prudential application of market power and market presence to transform deposit mobilisation, under a given macro-economic condition, into earnings quality with capital boosting confidence. The finding is relevant in the understanding of the 2008 global financial crisis. In the context of the global macro economy, the framework casts the current global financial meltdown in the light of the failure of market power and market presence to transform deposit mobilisation into earnings quality as imprudence stretched the sub-prime mortgage and credit default swap risks. Since capital could not offer cushion, confidence fell and bank financial condition grew worse.

Suggested Citation

  • Jonathan Njoku & Eno L. Inanga, 2010. "The anatomy of banking firm financial condition," International Journal of Economics and Accounting, Inderscience Enterprises Ltd, vol. 1(3), pages 284-311.
    • Handle: RePEc:ids:ijecac:v:1:y:2010:i:3:p:284-311
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