Efficiency and Profitability of Listed Deposit Money Banks in Nigeria
DOI:
https://doi.org/10.61143/umyu-jafr.1(2)2021.003Keywords:
Profitability, Efficiency, DMBsAbstract
This paper examines the impact of firm efficiency on the corporate profitability of listed Deposit Money Banks (DMBs) in Nigeria. The paper is carried out based on the historical panel data analysis. To achieve this objective; an ex-post factor research design was employed. Data were generated from the annual reports and accounts of the sampled quoted Deposit Money Banks (DMBs) from 2005 – 2014. Fixed-Effect and Random-Effect Generalized Least Square (GLS) regression techniques were used as tools of data analysis. The findings establish that the independent variables (firm efficiency) has insignificant positive effect on the DMBs’ profitability proxies represented by ROA and ROE. It was concluded that Firm Efficiency does not have significant impact on the profitability of the listed DMBs in Nigeria. The paper recommends that DMBs should ensure strict compliance with the international benchmark for efficiency ratio at 0.6 (Aguidissou, Shambare and Rugimbana, 2014) as it goes a long way in improving their performance. This is to encourage the directors of the DMBs to strive to improve their managerial efficiency which in turns improve their performance.
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