Determinants of Deposit Money Banks' Profitability in Nigeria

Olaoye, Festus Oladipupo; Olarewaju, Odunayo Magret

doi:10.12816/0018987

Cited by 8 publications

(9 citation statements)

References 1 publication

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“…Risk Exposures that accumulate due to banks carrying out activities need to be supported by high-quality capital. In the event of a global crisis, banks generally suffer losses from the credit business and require actions to eliminate loans that have an impact on capital (IBI, 2016) This study does not support previous research conducted by Boadi Olaoye and Olarewaju (2015) and Alper and Anbar (2011). The regulator sets a minimum ratio of 8% CAR.…”

Section: Effect Of Nim On Roacontrasting

confidence: 67%

Factors Affecting Performance and the Impact on Customer Trust of Systemic Bank in Indonesia Period 2012-2017

Salim

Julian

2020

Int. J. Eng. Tech. Mgmt. Res.

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The aim of this study was to analyze the factors that influence Performance and Its Impact on Customer Trust of Systemic Bank period 2012-2017. The independent variable of this study uses the financial ratio of Non-Performing Loans (NPL), Cost Income Ratio (CIR), Net Interest Margin (NIM), and Capital Adequacy Ratio (CAR). Performance measured by Return on Assets (ROA), and for the Customer Trust variable measured by Bank Rating. The study used panel data analysis and the process was using Eviews version 9.0. The results of the analysis in this study indicate that (1) NPL has a negative and not significant effect on ROA, (2) CIR has a negative and significant effect on ROA, (3) NIM has a positive and significant effect on ROA, (4). CAR has a negative and not significant effect on ROA, (5) NPL, CIR, NIM and CAR simultaneously have a positive and significant effect on ROA, (6) NPL has a positive and not significant effect on Rating. (7) CIR has a negative and not significant effect on Rating, (8) NIM has a negative and significant effect on Rating. (9) CAR has a positive and not significant effect on Rating, (10) NPL, CIR, NIM and CAR simultaneously have a positive and significant effect on Rating, (11) ROA has a negative and not significant effect on Rating.

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Section: Effect Of Nim On Roacontrasting

confidence: 67%

Factors Affecting Performance and the Impact on Customer Trust of Systemic Bank in Indonesia Period 2012-2017

Salim

Julian

2020

Int. J. Eng. Tech. Mgmt. Res.

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“…The model summarizes the influence of Capital Adequacy, Credit risk, bank size and inflation on bank profitability. In this study, the bank-level and macroeconomic factors affecting the profitability of Deposit Money Banks in ACWA were assessed from the data collected and the values obtained were then substituted in the model of the study stated below in line with previous studies such as (Shehu and Abubakar, 2012), (Shehu and Musa, 2014), (Ahmad, 2014), (AlGhusin, 2015), (Olaoye, 2015) but adapted and modified to suit the best purpose of this research.…”

Section: Methodsmentioning

confidence: 99%

Determinants of Profitability of Listed Deposit Money Banks in Anglophone Countries of West Africa (ACWA): A Cross Country Study

Adekunle¹

2018

ijird

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Background to the Study The banking sector of Anglophone Countries of West Africa (ACWA) has gone through tremendous changes in the past few years and this has made it more competitive and largely contributive to economic stability and development as a result of their huge investment in information technology and automation such as Automated Teller Machine (ATM), Mobile Banking, Point of Sale (POS) as well as Internet Banking. The financial system therefore, stands as a vital ingredient in any economic environment of a Nation (Fentaw, 2015). Commercial Banks, otherwise called, Deposit Money Banks serve as the bedrock and key players of the economy of nations and as such their relevance in the rapid development of economies cannot be overstressed. The financial sector performs an essential function in the development process of a country through financial intermediation (Chris, 2010). Proper functioning of Deposit Money Banks is required to facilitate the reliable provision and efficient management of scarce financial resources for promoting socioeconomic developments. Banking sector plays a crucial part in the economic growth of any nation and it also performs financial intermediation with the lowest possible cost with a view to achieving greater social welfare (Joaquín, 2004). The lower the cost of banking operations, the lower the social cost of financial intermediation and subsequently the higher, the bank profitability. Banks liquidation usually brings about systemic economic crisis. Hence, it is so vital to study determinants of Bank's profitability (Owoputi, Kayode and Adeyefa, 2014). This study will therefore dwell on factors such as capital adequacy, credit risk, bank size and inflation as they affect banks' profitability in Anglophone Countries of West Africa. The variables used in this study are described hereunder, together with the motivation for including them in the research work. Capital adequacy usually serves as a safety net in case of any eventuality. High ratio of capital adequacy implies lower external financing and subsequently, higher profitability. Capital adequacy enables the banks to retain capital, absorb loan losses, support future growth of assets and provide return to investors (Qin and Pastory, 2012). Capital adequacy stands as banks' internal strengths to bear up losses in case of distress. When the ratio of capital adequacy is high, it is expected that the requirement for external finance will reduce, thereby leading to higher bank profitability (Johannes, 2015). The equity to total assets ratio as a measure of capital adequacy enables banks to absorb shocks that could lead to bank failures and losses. Highly capitalized banks are found to be more profitable than lowly capitalized ones because they incur less bankruptcy costs and less requirement for external financing particularly in developing economies (Almazari, 2013). The ability of banks to

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“…Still, some other studies have noted that the role of cost efficiency is not important in determining bank profitability (Athanasoglou et al, 2008;Kanas et al, 2012). Abundant empirical studies emanating from developing countries, especially Nigeria, have largely neglected the role of cost efficiency (Aburime, 2009;Ani et al, 2012;Ejoh, 2014;Echekoba et al, 2014;Olaoye and Olarewaju, 2015), whereas few studies that incorporated the factor have largely yielded contradictory evidences (Flamini et al, 2009;Ayadi and Boujelbene, 2012;Sufian, 2012;Merin, 2016).…”

Section: Empirical Reviewmentioning

confidence: 99%

The Determinants of Commercial Banks Profit Efficiency in Nigeria

Asaolu¹,

Aminu²

2021

CIJDS

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The study examined the determinants of commercial banks profit efficiency in Nigeria. Annual data were employed and sourced from Central Bank of Nigeria Statistical Bulletin Various Issues and bank' annual financial statement of account. The data covered the period 2002-2019. The study used panel analytical techniques, such as panel unit root analysis, and panel regression. The empirical findings revealed that GTB, Skybank, Sterling bank, Union bank, Unity bank, Wema bank, and Zenith bank were profit efficient, while Access bank, Diamond bank, FCMB, Fidelity bank, First bank, and UBA were profit inefficient. Loan loss provision to net interest revenue was found to be negatively related to banks profitability. The result of banks efficiency ratio indicate that GTB, Skybank, Sterling bank, Union bank, Unity bank, Wema bank, and Zenith bank were profit efficient, while Access bank, Diamond bank, FCMB, Fidelity bank, First bank, and UBA were profit inefficient. Loan loss provision to net interest revenue was found to be negatively related to banks profitability. High incidence of nonperforming loans and overhead cost constitutes a critical element in the banking financial crisis. It is therefore recommended that banks management are advised to properly assess and monitor loans and advances, regularly review their credit policies to further reduce the incidence of non-performing loan, also constitute effective financial and legal sanction on default, exorbitant chief executive officer's and other top staff members' salaries that are not tied to performance should be reduced. Other strategies for desolation of non-performing loan should be put in place since AMCOM has not lived up to expectation. If checked, this will significantly reduce banking industry costs

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Determinants of Deposit Money Banks' Profitability in Nigeria

Cited by 8 publications

References 1 publication

Factors Affecting Performance and the Impact on Customer Trust of Systemic Bank in Indonesia Period 2012-2017

Factors Affecting Performance and the Impact on Customer Trust of Systemic Bank in Indonesia Period 2012-2017

Determinants of Profitability of Listed Deposit Money Banks in Anglophone Countries of West Africa (ACWA): A Cross Country Study

The Determinants of Commercial Banks Profit Efficiency in Nigeria

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