IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 4 NO. 2 2018

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Evaluation of the Financial Performance of Deposit Money Banks in Nigeria (2001 – 2014)

Richard Osadume, FCIB, PhD and Steve Ibenta (Ph.D)

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Abstract

The Financial Performance of banks has remained a source of concern for various users of financial statements saddled with making key economic and financial decisions. This paper evaluated the Financial Performance of Deposit Money banks in Nigeria: A study of selected quoted banks covering 2001 – 2014. The objective of this study was to assess the impact of Capital adequacy, Asset Quality and liquidity on the financial Performance of selected banks in Nigeria. Secondary sources of data used were collected from the audited financial reports of the respective banks. The study used the Unit root test, OLS, Co-integration and Granger Causality method to test and analyse the secondary data obtained from the bank’s annual publications at the 10% level of significance and the findings showed that: Financial Performance of selected Nigerian banks had significant relationship with Capital Adequacy, Asset Quality and Liquidity both in the short and long term; Also, none of the variables Granger Caused each other. The paper concludes that Capital adequacy, Asset Quality and Liquidity have significant effects on the Financial Performance of banks and recommends among others that Net Profit should not be the only basis for evaluating the Performance of Deposit Money Banks; and Bank Managers as well as Regulatory Authorities should adopt globally accepted standards for evaluating bank’s capital Adequacy, Assets Quality and Liquidity levels periodically. This will help to enhance investment planning, decision making within the financial system and early prevention of systemic bank distress. JEL Classification: F15 Financial Analysis and Reporting: Finance

keywords:

Financial Performance, Capital Adequacy, Asset Quality, Net liquidity

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