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Effect of Non-interest Income on Profitability of Deposit Money Banks in Nigeria

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  • Olowolaju, Philip Segun

    (Department of Accounting, Federal University of Technology, Akure, Nigeria)

Abstract

The study examined the effect of non-interest income on the profitability of Deposit Money Banks (DMBs) in Nigeria between 2006 and 2015. Five out of the 21 DMBs in Nigeria were purposively selected based on the numerical strength of their customers, volume of transactions and geographical spread. Multiple regressions were used in analyzing the data. The result of the correlation shows that non-interest income and profit of Nigerian banks was found to be positive and significant at 0.05 level of significance with adjusted R = 0.583. However the growth rate of non-interest income has been inconsistent over the years. Liquidity ratio, prime lending rate and inflation are found to have no significant relationship with non-interest income. The study concluded that non-interest income has positive and significant effect on the profitability of DMBs in Nigeria. It is recommended that deposit money banks should be actively involved in customer analysis and market research in order to develop those products and services that will continually satisfy majority of their customers and also deploy effective and efficient technology that will ease banking transactions which the consumers will be willing to pay for so that high non- interest income can be generated.

Suggested Citation

  • Olowolaju, Philip Segun, 2018. "Effect of Non-interest Income on Profitability of Deposit Money Banks in Nigeria," Journal of Banking and Financial Dynamics, Sophia, vol. 2(1), pages 1-8.
    • Handle: RePEc:ajn:jobafd:2018:p:1-8
    DOI: https://doi.org/10.20448/journal.525.2018.21.1.8
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    References listed on IDEAS

    as
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