ADEBOYE, N.O and AJIBODE, I. A (2016) CLASSIFICATION OF NIGERIA BANKS BASED ON FINANCIAL STABILITY USING LINEAR DISCRIMINANT ANALYSIS. Ilaro Journal of Science and Technology (ILJST)., 2 (1). pp. 1-16.
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Abstract
This paper focused on classification of Nigeria commercial banks into stable and nonstable banks. The research work is aimed at deriving a model that can be used to identify distressed banks. A sample of ten (10) commercial banks were selected and a linear discriminant function was fitted based on the bank profit before tax, profit after tax, asset, share capital and earnings per share as predictors variables. The parameter were analyzed with the aid of SPSS, which produced a linear discriminant function D=0.131 profit before tax,-0.445 profit after tax + 1.045 asset +0.569 earnings per share – 0.115 share capital for the classification of the banks into its various categories. The model is adjudged to be a good fit for the data with Wilks lambda value of 0.568 and a p-value of 0.001 which is less than 0.05. The classification is such that, once a bank’s score on the discriminant function is closer to 0.694, then the bank is classified as been stable or reliable while a bank’s score closer to -1.041 classified it as been unstable. All the ten (10) banks sampled were found to be stable after carrying out the classification rule. It is recommended that discriminant model can easily and accurately identify banks that may likely be distressed.
| Item Type: | Article |
|---|---|
| Subjects: | Q Science > Q Science (General) Q Science > QA Mathematics |
| Divisions: | Faculty of Engineering, Science and Mathematics > School of Mathematics |
| Depositing User: | Mr Taiwo Egbeyemi |
| Date Deposited: | 13 Jul 2020 11:08 |
| Last Modified: | 13 Jul 2020 11:08 |
| URI: | http://eprints.federalpolyilaro.edu.ng/id/eprint/987 |
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