Bankruptcy practice in the absence of long-term corporate financing: The Nigerian case

Ezeoha, Abel Ebeh; Anyigor, Chioma

doi:10.1057/jbr.2008.24

Cited by 2 publications

(2 citation statements)

References 11 publications

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“…The result confirms the existence of moral hazards and adverse selection in the country's credit system, where collateralized loans are more difficult to manage. While secured credits may have the tendency of building negative confidence in the minds of bank managers, in the case of Nigeria, high incidence of corruption also makes foreclosure on the part of secured creditors difficult (Ezeoha and Anyigor, 2009). Again, Ezeoha and Anyigor (2009) have argued that where bankruptcy resolution is a difficult phenomenon, the reliance on collaterals as a strategy for ensuring timely loan repayment does not always prove very optimal.…”

Section: Research Resultsmentioning

confidence: 99%

Banking consolidation, credit crisis and asset quality in a fragile banking system

Ezeoha

2011

Journal of Financial Regulation and Compliance

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PurposeThe aim of this paper is to identify the major determinants of bank asset quality in an era of regulation‐induced industry consolidation, using the Nigerian case to demonstrate how consolidation can heighten incidences of non‐performing credits in a fragile banking environment.Design/methodology/approachThe paper makes use of panel data from 19 out of a total of 25 banks operating in Nigeria. A multivariate constant coefficient regression model is adopted as the estimation technique. The dependent variable in the model is quality of bank assets, proxied as the proportion of non‐performing loans (NPL) to total loans; while operating efficiency, profitability, asset liquidity, loans to deposits ratio, predictability of depositors' behaviour, size of bank capital, and board skill constitute the exogenous variables.FindingsThe study reveals that deterioration in asset quality and increased credit crisis in the Nigerian banking industry between the periods 2004 and 2008 were exacerbated by the inability of banks to optimally use their huge asset capacity to enhance their earnings profiles. It shows that excess liquidity syndrome and relatively huge capital bases fueled reckless lending by banks; and that increase in the level of unsecured credits in banks' portfolios ironically helped to mitigate the level of NPL within the studied period.Research limitations/implicationsThe findings here should be interpreted with caution. The reason is because of the relatively fewer number of observations and the likely biases associated with the use of pooled regression approach.Originality/valueThis paper is one of the first to investigate the specific impact of banking consolidation on the quality of bank assets in an underdeveloped financial system. Among such countries facing such challenge, the Nigerian case is unique considering that the 2004/2005 banking consolidation in the country was recorded as the largest in the history of banking in Africa. The findings here make clearer the policy/practical implications of using regulation‐induced consolidation to pursue the goal of increased credit flows in a less developed financial system.

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Section: Research Resultsmentioning

confidence: 99%

Banking consolidation, credit crisis and asset quality in a fragile banking system

Ezeoha

2011

Journal of Financial Regulation and Compliance

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“…Generally, the weakness of the judicial system extends beyond prosecuting tax offences. Ezeoha and Ayigor (2009), for instance, collaborate the view that it is quite difficult to facilitate debt resolution, especially as it affects the foreclosure of collaterals, amidst a very inefficient judicial system. (see also Collier, 1996).…”

Section: Notesmentioning

confidence: 97%

Corporate tax shield or fraud? Insight from Nigeria

Ezeoha

Ogamba

2010

International Journal of Law and Management

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PurposeThe purpose of this paper is to establish whether inefficiency in a tax system and the likely difficulty in resolving tax matters can reduce the appeal for tax shield as incentive for debt financing, and by so doing exacerbate the cases of tax fraud.Design/methodology/approachA review approach/theoretical approach is adopted in the paper, where, in addition to reviewing literature on the relationship between tax incentives and corporate financing, the paper examines the structure of the Nigerian tax system, the gaps, and some pending tax cases involving foreign firms in Nigeria. Based on some theoretical judgments, efforts were made to link the rising cases of tax frauds to the dwindling appeal for tax shield as an incentive for the use of debt.FindingsThe study reveals that, as in the case of Nigeria, an environment of multiple tax system reduces incentives to pay tax or for voluntary compliance; that the exclusion of crucial non‐debt tax shelters such as depreciation, heightens pressure on the use of debt‐based tax shelters; and that controversies on deductibility make it difficult to distinguish between criminal and civil proceedings in tax cases.Research limitations/implicationsThe paper is only theoretical. The number of cases captured is very limited. However, the issue of tax frauds among corporate entities in the country remains very popular.Originality/valueThe paper is the first to examine the likelihood of an inefficient tax environment to reduce the appeal of tax shield as an incentive to debt financing.

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Bankruptcy practice in the absence of long-term corporate financing: The Nigerian case

Cited by 2 publications

References 11 publications

Banking consolidation, credit crisis and asset quality in a fragile banking system

Banking consolidation, credit crisis and asset quality in a fragile banking system

Corporate tax shield or fraud? Insight from Nigeria

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