The Determinants of Profitability in the Nigerian Deposit Money Banks

Aliyu Abba¹ , Chamo Buhari Muhammad² , Yusuf Sani Rurumah³

Section:Research Paper, Product Type: Journal-Paper
Vol.7 , Issue.2 , pp.32-38, Dec-2019

Online published on Dec 31, 2019

Copyright © Aliyu Abba, Chamo Buhari Muhammad, Yusuf Sani Rurumah . This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
 

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Abstract :
The study aims to evaluate the Determinants of Profitability in the Nigerian Deposit Money Banks. The population of the study comprised of 20 Banks listed on the Nigerian stock exchange with a working population of 6 Banks using filter as a sampling technique to select the working population, and which a period of five (5) years was used from 2012-2016. The data generated from the Bank’s annual report and account was analyzed by means of Descriptive statistics, Correlation and Regression analysis using Eviews 8.0. The result of the analysis was tested at 0.05 (5%) level of significance. The findings of the study show that Capital Adequacy has a significant relationship with return on equity; it also revealed that Asset Quality and Management Efficiency have no significant relationship with Return on Equity of Deposit Money Banks. Therefore, the study recommended that, the management of the Deposit Money Banks should endeavour to intensify effort to increase their Capital Adequacy by issuing more shares to the public for subscription more especially at premium to generate additional capital in form of share premium, and should decrease their asset especially non-current assets through leasing in order to increase their profitability, it is also recommended that the management of the deposit money banks should seek for other means that will increase their profitability other than management efficiency such as liquidity by increasing their current assets more than their current liabilities, and also should not consider the age of the bank as one of the factors that will increase their profitability and consider other factors that has significant on the banks profitability such as capital adequacy and liquidity as found in this study.

Key-Words / Index Term :
Profitability, Banks, Asset Quality, Capital Adequacy, Management Efficiency

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