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 Table of content 2(2): 269-281, May 2020

International Journal of Business, Finance and Economical Research, Vol. 2(2), pp 269-2681January 2020

doi:1014412/IJBFER2019.281

(ISSN 2315-6210) 2020 International Journal of Business, Finance and Economical Research,

 

Full Length Research Paper

EFFECT OF PROFITABILITY ON THE OPERATIONAL EFFICIENCY OF DEPOSIT MONEY BANKS IN NIGERIA.

 

Tajudeen T. Lawal, PhD.*1; Jelili Akintola2; Adekunle Aderinto3;MrsOmotehinse, J. M.4;Ebenzer A.Adebisi5.

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1, 2, 3, &4:Federal Polytechnic, Faculty of Business Studies, Department of Banking & Finance, Ede-Nigeria.

5: Osun State University, Faculty of Management Science, Department of Accounting, Osogbo-Nigeria.

IJBFER.  

  2(2): 269-281, May 2020

 

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Abstract

Banking business remains the most highly regulated across the globe due to the important roles they play in financial intermediation within an economy. Banks are also regarded as commercial ventures and not charitable organizations, hence they are expected to earn reward in form of profits and returns to the providers of capital and investors that usually provide corporate resources to them. Previous empirical research provide contradictory, confounding and inconclusive results on the value relevance of profitability in banks’ evaluation and efficiency, thus providing an in-road literature gap for further empirical evidence especially from developing nation like Nigeria. The main objective of the study is to examine the effect of profitability on the operational efficiency of banks in Nigeria with a special focus on DMBs. This study engaged both positivistic and interpretative research philosophical paradigm. Data were collected from the banks’ financial statements and CBN statistical bulletins, thus making it a balanced panel data-sets for 15 banks for a period of 10 years (2007-2016). The research methodology is basically cross sectional survey, employing both descriptive and inferential statistics to confirm the reliability and validity of its results. Applying the panel least square regression model on the study, the findings from the research indicate that bank profitability significantly and statistically influenced the operational efficiency of banks in Nigeria (p-value=0.000<0.05).The present study is in tandem with previous studies that confirmed the statistical significance of this variable. Banks need to be profitable as a measure of stability and efficiency of the entire financial system. It was recommended by this study that adequate planning, monitoring and optimization of bank resources especially cost/ expense (overheads) will greatly assist banks to attain higher profitability no matter the level of competition in the banking environment where they operate.

 

Key words: Banking business, Deposit Money Banks (DMBs), Banking environment, Operational efficiency.

 

 

Key words: Heat equation, dynamics of labour, capital migration, economic integration.

 

 

 

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