IDEAS home Printed from https://ideas.repec.org/a/adi/bsrfbs/v1y2019i1p18-25.html
   My bibliography  Save this article

Dynamics of Capital Adequacy and Profitability of Internationalized Deposit Money Banks in Nigeria

Author

Listed:
  • NenuBari Ikue-John

    (University of Port Harcourt, Port Harcourt, Rivers State)

  • Emeka Nkoro

    (University of Port Harcourt, Port Harcourt, Rivers State)

Abstract

The study examines the dynamic responses of profitability indexes to capital adequacy ratios of authorized internationalized deposit money banks in Nigeria. The data were sourced from the financial yearbooks of the deposit money banks and analyzed with static and dynamic panel estimators. The static estimator shows that the banks have differences in managerial style, size, and profitability. Also, it was revealed that return on asset and return on equity responded positively to asset size, the efficiency of the use of the asset and current ratio in the static models and they were highly significant. However, they were insignificant in the dynamic specifications except for asset size that was significant in the return on asset model showing a weak dynamic response of profitability to capital adequacy ratios. Hence the study recommended that Banks should improve their share based as to increase the asset as this will improve profitability.

Suggested Citation

  • NenuBari Ikue-John & Emeka Nkoro, 2019. "Dynamics of Capital Adequacy and Profitability of Internationalized Deposit Money Banks in Nigeria," Bussecon Review of Finance & Banking (2687-2501), Bussecon International, vol. 1(1), pages 18-25, July.
  • Handle: RePEc:adi:bsrfbs:v:1:y:2019:i:1:p:18-25
    as

    Download full text from publisher

    File URL: https://www.bussecon.com/ojs/index.php/brfb/article/view/96/13
    Download Restriction: no

    File URL: https://www.bussecon.com/ojs/index.php/brfb/article/view/96
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Heid, Benedikt & Langer, Julian & Larch, Mario, 2012. "Income and democracy: Evidence from system GMM estimates," Economics Letters, Elsevier, vol. 116(2), pages 166-169.
    2. 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.
    3. Odunayo M. Olarewaju & Oluwafeyisayo K. Adeyemi, 2015. "Causal Relationship between Liquidity and Profitability of Nigerian Deposit Money Banks," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5(2), pages 165-171, April.
    4. Asikhia Olalekan & Sokefun Adeyinka, 2013. "Capital Adequacy And Banks’ Profitability Of Deposit Taking: An Empirical From Nigeria," Far East Journal of Psychology and Business, Far East Research Centre, vol. 13(4), pages 32-41, October.
    5. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    6. Richard Blundell & Stephen Bond & Frank Windmeijer, 2000. "Estimation in dynamic panel data models: improving on the performance of the standard GMM estimator," IFS Working Papers W00/12, Institute for Fiscal Studies.
    7. Arellano, Manuel & Bover, Olympia, 1995. "Another look at the instrumental variable estimation of error-components models," Journal of Econometrics, Elsevier, vol. 68(1), pages 29-51, July.
    8. Olalere Oluwaseyi Ebenezer & Wan Ahmad Wan Bin Omar & Syahida Kamil, 2017. "Bank Specific and Macroeconomic Determinants of Commercial Bank Profitability: Empirical Evidence from Nigeria," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 6(1), pages 25-38, January.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Nenubari Ikue John & Ifeanyichukwu Lucky Amabuike & Joseph Ade Ajaba & John Akin Sodipo & Linus Bamekpari Enegesi, 2020. "Financial system, trade concentration and economic growth in West African Monetary Zone (WAMZ)," International Journal of Research in Business and Social Science (2147-4478), Center for the Strategic Studies in Business and Finance, vol. 9(4), pages 426-436, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yu, Bingxin & Fan, Shenggen & Saurkar, Anuja, 2009. "Does Composition of Government Spending Matter to Economic Growth?," 2009 Conference, August 16-22, 2009, Beijing, China 51684, International Association of Agricultural Economists.
    2. Aditi Bhattacharyya, 2012. "Adjustment of inputs and measurement of technical efficiency: A dynamic panel data analysis of the Egyptian manufacturing sectors," Empirical Economics, Springer, vol. 42(3), pages 863-880, June.
    3. Bertrand, Olivier & Zuniga, Pluvia, 2006. "R&D and M&A: Are cross-border M&A different? An investigation on OECD countries," International Journal of Industrial Organization, Elsevier, vol. 24(2), pages 401-423, March.
    4. Anabela Carneiro & Pedro Portugal, 2008. "Market power, dismissal threat, and rent sharing: The role of insider and outsider forces in wage bargaining," International Journal of Manpower, Emerald Group Publishing, vol. 29(1), pages 30-47, March.
    5. Maurice J. G. Bun & Frank Windmeijer, 2010. "The weak instrument problem of the system GMM estimator in dynamic panel data models," Econometrics Journal, Royal Economic Society, vol. 13(1), pages 95-126, February.
    6. Hujer, Reinhard & Zeiss, Christopher, 2006. "Macroeconomic Effects of Short-Term Training Measures on the Matching Process in Western Germany," IZA Discussion Papers 2489, Institute of Labor Economics (IZA).
    7. Lalanne, Marie & Seabright, Paul, 2011. "The Old Boy Network: Gender Differences in the Impact of Social Networks on Remuneration in Top Executive Jobs," TSE Working Papers 11-259, Toulouse School of Economics (TSE).
    8. Bun, Maurice J.G. & Kiviet, Jan F., 2006. "The effects of dynamic feedbacks on LS and MM estimator accuracy in panel data models," Journal of Econometrics, Elsevier, vol. 132(2), pages 409-444, June.
    9. Carmine Ornaghi, 2006. "Assessing the effects of measurement errors on the estimation of production functions," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 21(6), pages 879-891.
    10. Wu, Ji & Luca, Alina C. & Jeon, Bang Nam, 2011. "Foreign bank penetration and the lending channel in emerging economies: Evidence from bank-level panel data," Journal of International Money and Finance, Elsevier, vol. 30(6), pages 1128-1156, October.
    11. Alfonso Arpaia & Giuseppe Carone, 2004. "Do labour taxes (and their composition) affect wages in the short and in the long run?," Public Economics 0411004, University Library of Munich, Germany.
    12. Florian Pelgrin & Arnaud Sylvain & Eric Heyer, 2003. "Durées d'utilisation des facteurs et fonction de production : une estimation par la méthode des moments généralisés en système," Working Papers hal-00972839, HAL.
    13. Michal Madr, 2016. "Economic Development as a Factor of Democratisation: Evidence from Post-Socialist Economies," MENDELU Working Papers in Business and Economics 2016-70, Mendel University in Brno, Faculty of Business and Economics.
    14. Scott, K. Rebecca, 2015. "Demand and price uncertainty: Rational habits in international gasoline demand," Energy, Elsevier, vol. 79(C), pages 40-49.
    15. Huang, Bwo-Nung & Hwang, M.J. & Yang, C.W., 2008. "Causal relationship between energy consumption and GDP growth revisited: A dynamic panel data approach," Ecological Economics, Elsevier, vol. 67(1), pages 41-54, August.
    16. Andrew Benito, 2003. "The capital structure decisions of firms: is there a pecking order?," Working Papers 0310, Banco de España.
    17. Sergio de Nardis & Roberta De Santis & Claudio Vicarelli, 2008. "The Euro's Effects on Trade in a Dynamic Setting," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 5(1), pages 73-85, June.
    18. Jugnu Ansari & Ashima Goyal, 2014. "Bank Competition, Managerial Efficiency and the Interest Rate Pass-Through in India," Contemporary Studies in Economic and Financial Analysis, in: Jonathan A. Batten & Niklas F. Wagner (ed.), Risk Management Post Financial Crisis: A Period of Monetary Easing, volume 96, pages 317-339, Emerald Publishing Ltd.
    19. Moral-Benito, Enrique & Bartolucci, Cristian, 2012. "Income and democracy: Revisiting the evidence," Economics Letters, Elsevier, vol. 117(3), pages 844-847.
    20. Cadarso, Maria Angeles & Gomez, Nuria & Lopez, Luis Antonio & Tobarra, Maria Angeles, 2008. "The EU enlargement and the impact of outsourcing on industrial employment in Spain, 1993-2003," Structural Change and Economic Dynamics, Elsevier, vol. 19(1), pages 95-108, March.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:adi:bsrfbs:v:1:y:2019:i:1:p:18-25. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: http://www.bussecon.com .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Umit Hacioglu (email available below). General contact details of provider: http://www.bussecon.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.