Analysis of the Impact of the Nigerian Deposit Insurance Corporation on the Stability of the Financial System in Nigeria

This study examines the impact of the Nigerian Deposit Insurance Corporation (NDIC) on the stability of Nigeria's financial system, focusing on its role in enhancing depositor confidence, promoting financial inclusion, and mitigating systemic risks. Employing a mixed-methods research design, data were collected from 367 respondents through structured questionnaires and complemented by semi-structured interviews with NDIC officials, bank officers, financial experts, and community leaders. Quantitative analysis, including regression and correlation techniques, revealed that NDIC supervision, the effectiveness of the Differential Premium Assessment System (DPAS), bank capital adequacy, and regulatory frameworks significantly contribute to systemic stability. At the same time, high levels of non-performing loans negatively affect the banking sector. Qualitative findings further highlighted the importance of public awareness of NDIC’s functions, proactive risk-based supervision, and timely interventions in distressed banks as critical factors in fostering trust and financial resilience. The study also identifies challenges, including limited outreach in rural areas, insufficient communication about digital financial services, and coordination gaps with other regulatory bodies. The findings underscore that effective deposit insurance mechanisms, coupled with robust regulatory oversight and public education, are vital for sustaining a stable, inclusive, and resilient financial system in Nigeria. The study provides insights for policymakers, financial institutions, and stakeholders aiming to strengthen the banking sector’s stability.