Asymmetric Analysis of Macroeconomic and Financial Determinants of Deposit Money Banks Performance in Nigeria

Abstract

The performance of the banking industry is influenced by the economic, social, and political context in which it functions. The significant impact of the macroeconomic and financial environment on the performance of DMBs in Nigeria is apparent. The asymmetrical analysis of macroeconomic and financial factors influencing the performance of DMBs in Nigeria was investigated in this study. The researchers decided to use an ex-post-facto design. The data used in this study were obtained from the CBN annual statistics bulletin and the NBS. The NARDL methodology was used to conduct data analysis. The individual is referred to as Phillip-Peron. Unit root tests have shown a varied level of integration, although co-integration. The use of bounds testing methodology has provided evidence supporting the presence of a long-term association between the independent and dependent variables. The results indicate that the gross domestic product and all share index of the capital market have a favorable impact on DMBs in Nigeria. Conversely, inflation, monetary policy rate, and private sector credit have a negative influence on DMBs in Nigeria. The study recommended, among others, that the Federal Government should be committed to implementing economic policies aimed at accelerating rapid economic growth for the enhanced performance of DMBs in Nigeria, and the CBN should be more dynamic and strategic with the monetary policy rate (MPR) to ensure an efficient interest rate charged by DMBs.