Nigeria - Methodological approach for development of a target deposit insurance fund model (Anglais)

This paper presents a framework to assist the Nigerian Deposit Insurance Corporation (NDIC) in determining the target deposit insurance fund for Nigeria’s largest commercial and merchant banks. The framework takes into consideration the role that credit...  Voir la suite This paper presents a framework to assist the Nigerian Deposit Insurance Corporation (NDIC) in determining the target deposit insurance fund for Nigeria’s largest commercial and merchant banks. The framework takes into consideration the role that credit and liquidity risks play in bank failure as well as recent changes to bank regulation and crisis management in Nigeria. The paper is organized as follows: section one gives introduction. Section 2 discusses the recent history of Nigerian banks, particularly events that affect the NDIC and provides an overview of the overall deposit insurance framework. Section 3 discusses the previous literature on modeling the target deposit insurance fund. Section 4 presents the proposed framework for determining the target deposit insurance fund. Section 5 discusses economic conditions that might influence deposit insurance losses, followed by Monte Carlo simulation model calibration in section 6. Section 7 provides the results of target insurance fund estimates. Section 8 presents an analysis of the sensitivity of target fund estimates to changes in the framework parameters. Section 9 discusses model assumptions and weaknesses and section 10 concludes. The paper includes eight appendices that provide detailed discussion of technical aspects of target fund modeling framework and deposit insurance function.  Réduire