Title:
Effect of Leading Macroeconomic Variables on the Financial Performance of Deposit Money Banks in Nigeria

Authors:
Nwala N. M, Mairafi, S. L and ECHE Ochoche, Nigeria

Abstract:

This study examined the leading macroeconomic variables on financial performance of deposit money banks in Nigeria. Specifically, the study sought to determine the effect of stock market index and money supply on return on assets of deposit money banks in Nigeria. Ex post Facto research design was adopted to carry out the research work. The study employed quarterly time series data from the period of 2010 to 2022. The secondary data were obtained from the Central bank of Nigeria Statistical bulletin (2022). The study adopted descriptive statistics, unit root test, co-integration test and Autoregressive Descriptive Lag (ARDL) to establish the effect of leading macroeconomic variables on financial performance of deposit money banks in Nigeria. The result of Johansen co integration shows that there was an indication of co integration at 0.05 significance level. With the aid of ARDL analysis, stock market index had a significant effect on e financial performance of deposit money banks in Nigeria. Money supply also had a significant effect on e financial performance of deposit money banks in Nigeria. The study suggested that the SEC take into account lowering barriers to stock market liquidity. Reducing barriers to foreign capital flows and fostering an atmosphere that encourages investors to transfer money from the money market to the capital market in order to increase market capitalization would improve bank performance. By lowering interest rates, the CBN should raise the money supply through monetary policy. This would encourage investment and put more money in depositors' hands, which will boost spending and improve bank financial performance.

DOI: https://doi.org/10.51505/IJEBMR.2024.81011