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Article
Determinants of Bank Financial Performance: A Study of Nigerian Deposit Money Banks
Author(s)
Fanen Anande-Kur, Avanenge Faajir, Alematu Agbo
Full-Text PDF XML 1360 Views
DOI:10.17265/1537-1514/2020.04.001
Affiliation(s)
Benue State University, Makurdi, Nigeria
ABSTRACT
This paper investigates the
effects of bank-specific and macroeconomic determinants on bank profitability;
a panel data approach has been adopted and effectively applied to 14 Nigerian
deposit money banks set for a period covering from 2012 to 2018 representing 98
firm-year observations. The study adopts panel data regression analysis Fixed
Effects Model (FEM) and Random Effects Model (REM). The paper finds that
bank-specific factors, such as capital efficiency, operational efficiency, credit
risk, and bank size significantly determine the financial performance of
Nigerian banks. Also, the gross domestic product (GDP) as a macroeconomic
factor plays a significant role in determining the profitability of banks in
Nigeria. The study recommends that policy should also be directed towards
improving the efficiency and resilience of Nigerian banks towards withstanding
economic shocks that may occur, such as a global pandemic.
KEYWORDS
bank profitability, panel regression analysis, bank-specific determinants, macroeconomic determinants
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