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Determinants Of Profitability Of Nigerian Deposit Money Banks

Author

Listed:
  • 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)

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.

Suggested Citation

  • Wasiu Abiodun Sanyaolu & Trimisiu Tunji Siynbola & Gbadebo Tirimisiyu Ogunmefun & Afeez Babatunde Makinde, 2019. "Determinants Of Profitability Of Nigerian Deposit Money Banks," Economic Review: Journal of Economics and Business, University of Tuzla, Faculty of Economics, vol. 17(1), pages 47-62, May.
    • Handle: RePEc:tuz:journl:v:17:y:2019:i:1:p:47-62
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    References listed on IDEAS

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    1. Eyup Kadioglu & Niyazi Telceken & Nurcan Ocal, 2017. "Effect of the Asset Quality on the Bank Profitability," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 9(7), pages 60-68, July.
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    5. Ofuan. J. Ilaboya & Izien. F. Ohiokha, 2016. "Firm Age, Size and Profitability Dynamics: A Test of Learning by Doing and Structural Inertia Hypotheses," Business and Management Research, Business and Management Research, Sciedu Press, vol. 5(1), pages 29-39, March.
    6. Ibrahim Abidemi Odusanya & Olumuyiwa Ganiyu Yinusa & Bamidele M. Ilo, 2018. "Determinants of Firm Profitability in Nigeria: Evidence from Dynamic Panel Models," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 68(1), pages 43-58, January-M.
    7. Kristin Regehr & Rajdeep Sengupta, 2016. "Has the Relationship between Bank Size and Profitability Changed?," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 49-72.
    8. Valentina Flamini & Miss Liliana B Schumacher & Mr. Calvin A McDonald, 2009. "The Determinants of Commercial Bank Profitability in Sub-Saharan Africa," IMF Working Papers 2009/015, International Monetary Fund.
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    Cited by:

    1. Wasiu Abiodun Sanyaolu & Babatunde Titus Adejumo & Idris Kadiri, 2020. "Board Diligence And Financial Performance: Evidence From Nigerian Deposit Money Banks," Copernican Journal of Finance & Accounting, Uniwersytet Mikolaja Kopernika, vol. 9(3), pages 145-160.
    2. Clement Olalekan Olaniyi & Titus Ayobami Ojeyinka & Xuan Vinh Vo & Mamdouh Abdulaziz Saleh Al‐Faryan, 2023. "Do business strategies vary across firms in the banking industry? New perspectives from the bank size–profitability nexus," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 525-544, January.

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    More about this item

    Keywords

    banks’ specific indicators; deposit money banks; macroeconomic indicators; fixed effect and profitability;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies

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