Interest Rates and Return on Assets of Selected Deposit Money Banks in Nigeria (2008-2017)

Prof (Mrs) Esther O. Adegbite, Dr Abolade Francis Akintola and Adepeju Adetumilara Adedire
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Prof (Mrs) Esther O. Adegbite: Department of Finance, University of Lagos, Akoka-Yaba, Lagos, Nigeria
Dr Abolade Francis Akintola: Department of Finance, Babcock University, Ilishan – Remo, Ogun State, Nigeria
Adepeju Adetumilara Adedire: Department of Finance, Babcock University, Ilishan – Remo, Ogun State, Nigeria

International Journal of Research and Scientific Innovation, 2020, vol. 7, issue 5, 243-250

Abstract: The paper investigated relationship between interest rate and return on assets of selected deposit money banks in Nigeria from 2008 to 2017. Data considered for the study were obtained from secondary source while ten (10) deposit money banks were selected for the study. Data gathered were analyzed using regression estimate while panel data analysis was utilized to examine magnitude and significance of the relationship and the research variables. Panel unit root test and Pedroni residual co-integration test were also applied in the study. The study concluded that prime lending rate, ratio of loan to deposit and treasury bill do not significantly affect return on assets, while savings deposit rate and maximum lending rate exert positive and significant effect on return on assets of deposit money banks in Nigeria. The study recommends that policy making authorities in Nigeria should coordinate interest rate fluctuations better and induce competition in the entire financial sector.

Date: 2020
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