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DETERMINANTS OF PROFITABILITY OF NIGERIAN DEPOSIT MONEY BANKS

Wasiu Abiodun Sanyaolu (), Trimisiu Tunji Siynbola (), Gbadebo Tirimisiyu Ogunmefun () and Afeez Babatunde Makinde ()
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Wasiu Abiodun Sanyaolu: Department of Accounting, Crescent University, Abeokuta, Ogun State, Nigeria
Trimisiu Tunji Siynbola: Department of Accounting, Babcock University, Ilishan Remo,Ogun State, Nigeria
Gbadebo Tirimisiyu Ogunmefun: Deputy Bursar, Bursary Department, Crescent University, Abeokuta
Afeez Babatunde Makinde: Department of Business and Finance, Crescent University, Abeokuta, Ogun State, Nigeria

Economic Review: Journal of Economics and Business, 2019, vol. 17, issue 1, 47-62

Abstract: This study investigates banks’ specific and macroeconomic determinants of profitability of ten listed deposit money banks in Nigerian Stock Exchange from 2008 to 2017 using fixed effect regression. The result reveals that capital adequacy, nonperforming loan, loan to total asset and size have significant positive effect on profitability, while age was found to exert significant but negative effect on profitability. The study could not however establish significant positive effect of macroeconomic indicators (economic growth and interest rate) on profitability of deposit money banks while inflation rate has negative but insignificant influence on profitability. Arising from the findings, the study recommends that government should initiate and execute economic policies that will improve the profitability of deposit money banks in Nigeria given the key role of the sector to the economy while banks should also manage their specific variables that are likely to improve profitability.

Keywords: banks’ specific indicators; deposit money banks; macroeconomic indicators; fixed effect and profitability (search for similar items in EconPapers)
JEL-codes: G10 G22 (search for similar items in EconPapers)
Date: 2019
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