Determinants of Listed Deposit Money Banks’ Profitability in Nigeria

Saheed Adekunle Muraina

doi:doi:10.11648/j.ijfbr.20180403.11

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Determinants of Listed Deposit Money Banks’ Profitability in Nigeria

Saheed Adekunle Muraina

Published in International Journal of Finance and Banking Research (Volume 4, Issue 3)

Received: 5 May 2018 Accepted: 19 June 2018 Published: 9 July 2018

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Abstract

This study examines internal factors affecting profitability of Deposit Money Banks (DMBs) in Nigeria for the period of 2008-2016 using panel data of 14 listed banks drawn from the Nigerian Stock Exchange. Secondary data obtained from the listed Deposit Money Banks' financial statements were analyzed. The independent variables were proxied by Capital Adequacy, Credit Risk, and Inflation while profitability was proxied by Return on Assets (ROA). The study adopts correlational research design to investigate the determinants of profitability of the Deposit Money Banks. Panel data techniques (fixed and random effects model) were employed to examine the effect of internal factors on profitability of the sampled listed Deposit Money Banks. Although Hausman specification test suggested that fixed effect model is more appropriate, the study used Feasible Generalized Least Square (FGLS) to underpin the outcome of the Hausman specification. The study found that internal factors had significantly influenced the deposit money banks' profitability over the study period. The Capital Adequacy had a positive and significant relationship with bank profitability while Credit Risk had a negative and significant relationship with bank profitability during the study period. It is therefore suggested among others that the Central Bank of Nigeria (CBN) should maintain a central database called Credit Risk Management System across banks in the country, which would be generating accurate and reliable credit information on bank borrowers as a way of evaluating the repayment capabilities of the customers to be granted credit facilities.

Published in	International Journal of Finance and Banking Research (Volume 4, Issue 3)
DOI	10.11648/j.ijfbr.20180403.11
Page(s)	40-56
Creative Commons	This is an Open Access article, distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution and reproduction in any medium or format, provided the original work is properly cited.
Copyright	Copyright © The Author(s), 2018. Published by Science Publishing Group

Keywords

Bank Profitability, Feasible Generalized Least Square, Capital Adequacy, Credit Risk, Deposit Money Banks

References

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Saheed Adekunle Muraina. (2018). Determinants of Listed Deposit Money Banks’ Profitability in Nigeria. International Journal of Finance and Banking Research, 4(3), 40-56. https://doi.org/10.11648/j.ijfbr.20180403.11

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Saheed Adekunle Muraina. Determinants of Listed Deposit Money Banks’ Profitability in Nigeria. Int. J. Finance Bank. Res. 2018, 4(3), 40-56. doi: 10.11648/j.ijfbr.20180403.11

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Saheed Adekunle Muraina. Determinants of Listed Deposit Money Banks’ Profitability in Nigeria. Int J Finance Bank Res. 2018;4(3):40-56. doi: 10.11648/j.ijfbr.20180403.11

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@article{10.11648/j.ijfbr.20180403.11,
  author = {Saheed Adekunle Muraina},
  title = {Determinants of Listed Deposit Money Banks’ Profitability in Nigeria},
  journal = {International Journal of Finance and Banking Research},
  volume = {4},
  number = {3},
  pages = {40-56},
  doi = {10.11648/j.ijfbr.20180403.11},
  url = {https://doi.org/10.11648/j.ijfbr.20180403.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20180403.11},
  abstract = {This study examines internal factors affecting profitability of Deposit Money Banks (DMBs) in Nigeria for the period of 2008-2016 using panel data of 14 listed banks drawn from the Nigerian Stock Exchange. Secondary data obtained from the listed Deposit Money Banks' financial statements were analyzed. The independent variables were proxied by Capital Adequacy, Credit Risk, and Inflation while profitability was proxied by Return on Assets (ROA). The study adopts correlational research design to investigate the determinants of profitability of the Deposit Money Banks. Panel data techniques (fixed and random effects model) were employed to examine the effect of internal factors on profitability of the sampled listed Deposit Money Banks. Although Hausman specification test suggested that fixed effect model is more appropriate, the study used Feasible Generalized Least Square (FGLS) to underpin the outcome of the Hausman specification. The study found that internal factors had significantly influenced the deposit money banks' profitability over the study period. The Capital Adequacy had a positive and significant relationship with bank profitability while Credit Risk had a negative and significant relationship with bank profitability during the study period. It is therefore suggested among others that the Central Bank of Nigeria (CBN) should maintain a central database called Credit Risk Management System across banks in the country, which would be generating accurate and reliable credit information on bank borrowers as a way of evaluating the repayment capabilities of the customers to be granted credit facilities.},
 year = {2018}
}

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TY  - JOUR
T1  - Determinants of Listed Deposit Money Banks’ Profitability in Nigeria
AU  - Saheed Adekunle Muraina
Y1  - 2018/07/09
PY  - 2018
N1  - https://doi.org/10.11648/j.ijfbr.20180403.11
DO  - 10.11648/j.ijfbr.20180403.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 40
EP  - 56
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20180403.11
AB  - This study examines internal factors affecting profitability of Deposit Money Banks (DMBs) in Nigeria for the period of 2008-2016 using panel data of 14 listed banks drawn from the Nigerian Stock Exchange. Secondary data obtained from the listed Deposit Money Banks' financial statements were analyzed. The independent variables were proxied by Capital Adequacy, Credit Risk, and Inflation while profitability was proxied by Return on Assets (ROA). The study adopts correlational research design to investigate the determinants of profitability of the Deposit Money Banks. Panel data techniques (fixed and random effects model) were employed to examine the effect of internal factors on profitability of the sampled listed Deposit Money Banks. Although Hausman specification test suggested that fixed effect model is more appropriate, the study used Feasible Generalized Least Square (FGLS) to underpin the outcome of the Hausman specification. The study found that internal factors had significantly influenced the deposit money banks' profitability over the study period. The Capital Adequacy had a positive and significant relationship with bank profitability while Credit Risk had a negative and significant relationship with bank profitability during the study period. It is therefore suggested among others that the Central Bank of Nigeria (CBN) should maintain a central database called Credit Risk Management System across banks in the country, which would be generating accurate and reliable credit information on bank borrowers as a way of evaluating the repayment capabilities of the customers to be granted credit facilities.
VL  - 4
IS  - 3
ER  -

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Saheed Adekunle Muraina

Department of Accounting, Ahmadu Bello University, Zaria, Nigeria

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Saheed Adekunle Muraina. (2018). Determinants of Listed Deposit Money Banks’ Profitability in Nigeria. International Journal of Finance and Banking Research, 4(3), 40-56. https://doi.org/10.11648/j.ijfbr.20180403.11

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Saheed Adekunle Muraina. Determinants of Listed Deposit Money Banks’ Profitability in Nigeria. Int. J. Finance Bank. Res. 2018, 4(3), 40-56. doi: 10.11648/j.ijfbr.20180403.11

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Saheed Adekunle Muraina. Determinants of Listed Deposit Money Banks’ Profitability in Nigeria. Int J Finance Bank Res. 2018;4(3):40-56. doi: 10.11648/j.ijfbr.20180403.11

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@article{10.11648/j.ijfbr.20180403.11,
  author = {Saheed Adekunle Muraina},
  title = {Determinants of Listed Deposit Money Banks’ Profitability in Nigeria},
  journal = {International Journal of Finance and Banking Research},
  volume = {4},
  number = {3},
  pages = {40-56},
  doi = {10.11648/j.ijfbr.20180403.11},
  url = {https://doi.org/10.11648/j.ijfbr.20180403.11},
  eprint = {https://article.sciencepublishinggroup.com/pdf/10.11648.j.ijfbr.20180403.11},
  abstract = {This study examines internal factors affecting profitability of Deposit Money Banks (DMBs) in Nigeria for the period of 2008-2016 using panel data of 14 listed banks drawn from the Nigerian Stock Exchange. Secondary data obtained from the listed Deposit Money Banks' financial statements were analyzed. The independent variables were proxied by Capital Adequacy, Credit Risk, and Inflation while profitability was proxied by Return on Assets (ROA). The study adopts correlational research design to investigate the determinants of profitability of the Deposit Money Banks. Panel data techniques (fixed and random effects model) were employed to examine the effect of internal factors on profitability of the sampled listed Deposit Money Banks. Although Hausman specification test suggested that fixed effect model is more appropriate, the study used Feasible Generalized Least Square (FGLS) to underpin the outcome of the Hausman specification. The study found that internal factors had significantly influenced the deposit money banks' profitability over the study period. The Capital Adequacy had a positive and significant relationship with bank profitability while Credit Risk had a negative and significant relationship with bank profitability during the study period. It is therefore suggested among others that the Central Bank of Nigeria (CBN) should maintain a central database called Credit Risk Management System across banks in the country, which would be generating accurate and reliable credit information on bank borrowers as a way of evaluating the repayment capabilities of the customers to be granted credit facilities.},
 year = {2018}
}

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TY  - JOUR
T1  - Determinants of Listed Deposit Money Banks’ Profitability in Nigeria
AU  - Saheed Adekunle Muraina
Y1  - 2018/07/09
PY  - 2018
N1  - https://doi.org/10.11648/j.ijfbr.20180403.11
DO  - 10.11648/j.ijfbr.20180403.11
T2  - International Journal of Finance and Banking Research
JF  - International Journal of Finance and Banking Research
JO  - International Journal of Finance and Banking Research
SP  - 40
EP  - 56
PB  - Science Publishing Group
SN  - 2472-2278
UR  - https://doi.org/10.11648/j.ijfbr.20180403.11
AB  - This study examines internal factors affecting profitability of Deposit Money Banks (DMBs) in Nigeria for the period of 2008-2016 using panel data of 14 listed banks drawn from the Nigerian Stock Exchange. Secondary data obtained from the listed Deposit Money Banks' financial statements were analyzed. The independent variables were proxied by Capital Adequacy, Credit Risk, and Inflation while profitability was proxied by Return on Assets (ROA). The study adopts correlational research design to investigate the determinants of profitability of the Deposit Money Banks. Panel data techniques (fixed and random effects model) were employed to examine the effect of internal factors on profitability of the sampled listed Deposit Money Banks. Although Hausman specification test suggested that fixed effect model is more appropriate, the study used Feasible Generalized Least Square (FGLS) to underpin the outcome of the Hausman specification. The study found that internal factors had significantly influenced the deposit money banks' profitability over the study period. The Capital Adequacy had a positive and significant relationship with bank profitability while Credit Risk had a negative and significant relationship with bank profitability during the study period. It is therefore suggested among others that the Central Bank of Nigeria (CBN) should maintain a central database called Credit Risk Management System across banks in the country, which would be generating accurate and reliable credit information on bank borrowers as a way of evaluating the repayment capabilities of the customers to be granted credit facilities.
VL  - 4
IS  - 3
ER  -

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