Fiscal Variation and Commercial Banks Assets Quality in Nigeria

Listed commercial banks in Nigeria were the focus of this investigation of the correlation between fiscal policy volatility and the quality of their assets. To what degree does the dynamic of fiscal policy impact the quality of assets held by commercial banks was the intended examination. The listed commercial banks' annual reports and financial statements provided the panel data, while the Central Bank of Nigeria's statistical bulletins from 2014 to 2023 provided the time series data.We utilized panel ordinary least square methods to analyze the correlation between fiscal policy and the quality of assets held by the commercial banks that were quoted. R2 with adjustments, t-test, probability coefficient, Durbin-Watson statistic, and f-statistic. The model used tax revenue, recurrent spending, capital expenditure, deficit expenditure, and nontax revenue as its parameters to determine the quality of assets. According to the study's adjusted R2 value of 0.525390, which was derived from the table, the independent variables explain 52.5% of the variance in the quality of commercial banks' assets. The results showed that commercial banks' asset quality is negatively affected by taxes and capital expenditure, and positively affected by deficit financing, public debt, and capital expenditure, especially listed commercial banks. Public capital expenditure is significantly correlated with financial performance, recurrent expenditure is significantly correlated with asset quality, tax is not significantly correlated with financial performance, deficit financing is significantly correlated with asset quality, and public debt is significantly correlated with asset quality among Nigerian commercial banks, according to the study's conclusions. The study concludes that listed commercial banks' asset quality can be improved through the implementation of policies aimed at managing the fiscal environment.