The Determinants of Assets Performance of Deposit Money Banks in Nigeria
Ernest O. Alukpe
Department of Banking and Finance, University of Benin, Benin, Nigeria.
Williams Odiche *
Department of Finance and Banking, University of Port Harcourt, Choba, Nigeria.
Captain N. J. Mballey
Department of Finance and Banking, University of Port Harcourt, Choba, Nigeria.
Lucky Orlu
Department of Economics, Rivers State University, Port Harcourt, Nigeria.
*Author to whom correspondence should be addressed.
Abstract
The study examined the determinants of assets performance of deposit money banks (DMBs) in Nigeria after the banking reforms of 2004 through 2005. A sample of sixteen (16) banks consisting of ten DMBs with international business licenses and six DMBs with licenses to operate only locally were selected, with data on internal determinants (Size, Liquidity, and diversification) obtained from individual audited annual financial report of the selected banks while that macroeconomic variables (real Gross Domestic Product growth rate and inflation rate) were sourced from Central Bank of Nigeria official website and regressed on assets performance denoted by ROA for the period of thirteen years (13), from 2004 to 2016. The study employed descriptive statistics, correlation analysis, and panel generalized least square (cross-section random effect). The results revealed that size, liquidity measured by total loans, and advances to total deposits as well as real GDP growth rate were significant determinants of the performance of the asset of DMBs in Nigeria. Also, Diversification measured by non-interest incomes to total assets and inflation rate were found not to have a significant impact on the performance of the asset of deposit money banks in Nigeria. The study, therefore, recommended that bank managers should institute a sound, efficient, and sustainable assets management framework to ensure that the income generation capacity of banks is widened, and regulatory agencies should review existing regulations and make new policies that would encourage deposit money banks in Nigeria.
Keywords: Tassel, Deposit money banks, Wood, size, Seeding,, liquidity, epigeal germination, diversification, inflation rate, real GDP, fixed effect panel, Nigeria.