IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 10 NO. 2 2025
DOI: 10.56201/ijefm.v10.no2.2025.pg134.155

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Macroeconomic Variables and Quoted Commercial Banks’ Capital Adequacy Ratio in Nigeria

Onuabi, Evans Jared, Obieche Precious Nkechi

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Abstract

This study examined the effect of macroeconomic variables on quoted commercial banks capital adequacy ratios. Cross sectional data were sourced from financial statement of the commercial banks and central Bank of Nigeria statistical bulletin from 2015 t0 2024. Capital adequacy ratio was modeled as the function of interest rate, real gross domestic product, inflation rate and exchange rate. The study employed the employed that panel data ordinary least square methods. R-square, Adjusted R-square, Regression coefficient, Durbin Watson, T-statistic and F-values were used to determine the effect of macroeconomic variables on the capital adequacy of the quoted commercial banks. Findings revealed that 72.1 percent of the total variations in the capital adequacy ratio of the 14 quoted commercial banks are accounted for, by the four macroeconomic variables as formulated in the model. Inflation rate has positive effect on capital adequacy of the quoted commercial banks and added 0.53 percent, interest have positive but no significant effect on capital adequacy of the quoted commercial banks and added 0.3 percent, exchange rate have positive and significant effect and added 0.59 percent to capital adequacy while gross domestic product have negative and no significant affect, reduce bank capital adequacy by 0.005 percent over the periods of the study. From the findings, the study concludes that macroeconomic variables determine commercial banks capital adequacy in Nigeria. We recommend that Government should ensure that macroeconomic policies such as interest rate through money supply are properly managed in a manner that it will enhance commercial bank capital adequacy ratios. There is need for efficient management of exchange, inflation and interest rates in such a way to stimulate the financial market that cushion the volatility of macroeconomic variables to enhance commercial banks capital adequacy. That foreign exchange rate co

keywords:

Macroeconomic Variables, Commercial Banks, Capital Adequacy Ratio, Nigeria

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