DETERMINANTS OF FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

ABSTRACT

This study examines the determinants of the financial performance of deposit money banks in Nigeria. The variables considered in this study include capital adequacy, nonperforming loan, liquidity, firm size, interest rate and inflation. A sample of twelve (12) deposit money banks between 2015 and 2020 were examined using descriptive statistics, correlation analysis and panel random effect technique. The empirical results revealed capital adequacy, firm size, interest rate, inflation and are key factor that significantly influences performance of deposit money banks in Nigeria. The study therefore, recommends that deposit money banks need to pay close attention to their operational cost effectiveness and leverage ratio since having too many expenses relative to their income and taking on debts that are beyond their means will continue to have a negative impact on their ability to make money.  Also, iIn order to increase loan volume, the interest rate policy must be considered in the context of the current economic climate because low interest rates do encourage prompt repayment and greatly lower the risk of debt failure this will increase profitability and financial performance of deposit money banks.