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Price Levels, Exchange Rates, Interest Rates and Return on Equity of Commercial Banks in Nigeria: The Moderating Effect of Bank Competitiveness

Author

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  • Malgit Amos Akims

    (Department of Public Policy and Administration, Kenyatta University, Nairobi, Kenya.)

Abstract

The study sought to establish the moderating effect of bank competitiveness on the relationship between price levels, exchange rates, interest rates and return on equity of commercial banks in Nigeria. This paper originates from the PhD Thesis of the author. The study focused fifteen out of the seventeen commercial banks in Nigeria which were fully operational within the period 2010 to 2017. The study found that bank competitiveness had a significant moderating effect (β=0.0484, p=0.0130) on the relationship between price levels and return on equity of commercial banks in Nigeria. The study however found that bank competitiveness had no significant moderating effect (β=0.0009, p=0.4990) on the relationship between exchange rates and return on equity of commercial banks in Nigeria. The study further documented that bank competitiveness had no significant moderating effect (β=0.2066, p=0.1860) on the relationship between interest rates and return on equity of commercial banks in Nigeria. The study therefore recommends that in periods of rising price levels, bank management should stay competitive in the market by adequately adjusting interest rates upwards and accordingly. This in turn will help in cushioning the effect of any loss in the real purchasing power of money.

Suggested Citation

  • Malgit Amos Akims, 2022. "Price Levels, Exchange Rates, Interest Rates and Return on Equity of Commercial Banks in Nigeria: The Moderating Effect of Bank Competitiveness," Post-Print hal-05149963, HAL.
    • Handle: RePEc:hal:journl:hal-05149963
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