FINANCIAL REGULATIONS AND BANK PERFORMANCE IN NIGERIA.

ABSTRACT

Regulation of the finncial system, particularly banks guarantee safety and soundness of the industy, thus enhaning operational efficieny and perormance. It is on the bankdrop, this study investigated the impact of fiancial regulations on the performance of Nigerian banks from 2010 to 2020. Thirteen (13) deposit taking and interest charging banks were considered for the investigation. The expost-facto and cross-sectional research design was initiated to determine the effect of fiancial regulation on bank perforamce. The Fixed and Random Effects regression procedures were implemented and the Hausman test was applied on the random effect regression output to determine the most efficient estimate, which was seletected for the analysis. The E-view 9.0 computer software was used for the analysis. The findings of this study revealed that financial regulation instruments significantly infleunce bank performance in Nigeria. Specifically, bank liquidity ratio, capital adequacy ratio, prescribed cash reserve requirement positively and significantly influence bank performance. This study concludes that financial regulations are major factors influencing bank performance in Nigeria and recommend that the regulatory authorities, particularly central bank should combine both macro and micro prudential regulatory instruments to control financial institutions, especially banks because they are potent weapon to guarantee banks stability and enhance their performance, and that bank managers should pay devoted attention to both macro and micro prudential regulation because of their effect on bank performance.