THE CHANGING ROLE OF BANKS AND THE CHANGING VALUE OF DEPOSIT GUARANTEES: THE NEW NIGERIAN FINANCIAL SECTOR

AUTHOR(S): UCHE C. C. NWOGWUGWU and NKEM C. OKEKE

FROM AFRICAN BANKING AND FINANCE REVIEW VOL. 1 NO.2 APRIL 2011

PUBLISHED BY THE DEPARTMENT OF BANKING AND FINANCE, NNAMDI AZIKIWE UNIVERSITY, AWKA.

The study develops a model for valuing deposit guarantees. The model treats the bank’s investment as a portfolio of default-free bonds and risky loans. The risk of the loans is determined by individual firms’ financing and investment decisions in Nigeria as in most developed and developing economies. Pushing back risk to the level of the borrowing firms allows us to link deposit guarantees to specific characteristics of these loans, such as their durations, and to correlations between business risk and interest rates. Since the nature of bank loans has been changing over time, this model should predict the accompanying change in value of the government guarantees.

TO VIEW THE FULL CONTENT OF THIS DOCUMENT, PLEASE VISIT THE DIGITAL LIBRARY WEBSITE USING THIS LINK, http://naulibrary.org/dglibrary/admin/book_directory/Banking_and_finance/11262.pdf

Tags: , , , , , ,

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s


%d bloggers like this: