IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 10 NO. 2 2025
DOI: 10.56201/ijefm.v10.no2.2025.pg179.190

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Assessment of NDIC Role in the Prevention of Bank Distress in Nigeria

Yakubu Adamu PhD, Alhaji Kawugana PhD

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Abstract

The Nigeria Deposit Insurance Corporation (NDIC) plays a crucial role in safeguarding the stability of the banking sector by providing deposit insurance and implementing measures to prevent bank distress. This study assesses the effectiveness of NDIC’s role in the prevention of bank distress in Nigeria, with a particular focus on its regulatory framework, early warning systems, and intervention strategies. Using a combination of secondary data from NDIC reports, Central Bank of Nigeria (CBN) publications, and financial sector analyses, this study examines how NDIC’s policies have influenced the resilience of Nigerian banks. The research also evaluates challenges such as poor corporate governance, financial mismanagement, and regulatory inefficiencies that contribute to bank distress. Findings indicate that NDIC has been instrumental in mitigating bank failures through risk- based supervision, bank resolution mechanisms, and financial literacy programs. However, challenges such as delayed intervention, fraudulent banking practices, and economic downturns continue to pose risks to banking stability. The study recommends strengthening regulatory enforcement, improving financial transparency, and enhancing collaboration between NDIC and CBN to ensure a more robust banking sector. This study contributes to the existing literature by providing insights into the effectiveness of deposit insurance schemes in financial stability and offers policy recommendations for improving NDIC’s role in preventing future bank distress in Nigeria.

keywords:

Nigeria Deposit Insurance Corporation (NDIC), Bank Distress, Financial Stability, Deposit Insurance, Risk-Based Supervision, Regulatory Framework

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References:

• Central Bank of Nigeria (CBN). (2022). Financial stability report. Retrieved from
www.cbn.gov.ng
• Ebhodaghe, J. U. (2019). The role of the Nigeria Deposit Insurance Corporation in
ensuring banking stability. Journal of Banking and Finance in Africa, 15(3), 45-62.
• Ikechukwu, A. O., & Adegbite, T. K. (2021). An assessment of deposit insurance
schemes and their impact on financial stability in Nigeria. African Journal of Finance
and Banking Research, 18(1), 102-120.
• Nigeria Deposit Insurance Corporation (NDIC). (2023). Annual report and statement of
accounts. Retrieved from www.ndic.gov.ng
• Ogunleye, G. A. (2020). Regulatory frameworks and banking crisis management: The
NDIC experience. International Journal of Economics and Financial Studies, 25(4), 75-
• Olaniyi, R. T., & Yusuf, B. A. (2022). The impact of financial regulations on the stability
of Nigerian commercial banks. West African Financial Review, 11(2), 88-110.
• Uchenna, P. C., & Salisu, O. K. (2021). Evaluating the effectiveness of the NDIC’s
interventions in bank distress cases in Nigeria. Journal of Financial Regulation and
Compliance, 9(3), 129-145.

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