Title:
AN ANALYSIS OF THE DETERMINANTS OF COMMERCIAL BANK'S PROFITABILITY IN NIGERIA.

Authors:
Olorunfemi Oladele Ebenezer, Obademi Olalekan Emmanuel

Abstract:
The study is basically an investigation into the determinants of commercial bank profitability in Nigeria. The major objective was to examine as well as evaluate the macroeconomic factors which affect bank profitability. Two banks were selected for the study on the basis of their large size. Secondary data covering the period 2000 -2011 were used and subjected to regression analysis. Basically, the ordinary least square method of analysis was adopted. Part of the findings from the above analysis shows that the coefficient of the bank size (SIZE) is 0.000890. This implies that a positive relationship exists between bank size measures in terms of total asset on banks profitability (ROA). The coefficient of bank deposit (BDEP) which is -1.280564 is not consistent with a priori expectation. A negative relationship between bank deposit rate and bank profitability is implied from the result. The t-statistic value of -0.654700 also indicates statistical insignificance. The coefficient of capital (CAP) measure in terms of owners' equity and inflation rate (INF) is strong in terms of apriori expectation. In conclusion, many factor affect bank profitability which bank operators monitor to enable them withstand any negative shock as well as contribute to the stability of the financial system. As part of the recommendations, financial sector reforms should be cautiously implemented in line with reform/ policy objectives.