Journal of Emerging Trends in Economics and Management Sciences: Home

Article Title:
Determinants of Industry Specific Factors Affecting Banks Profitability in Nigeria Banking Industry: Panel Auto-Regressive Distributive Lag (ARDL) Approach
by Okoro Peter Chinaemerem Ph.D and Onuoha Favour Chidinma, Ph.D

Abstract:
This study used The Panel ARDL (Autoregressive Distributed Lag) Approach (Short and Long Run Elasticity) of thirteen Banks over 14-year period from 2005 to 2018. Three profitability measures which include: Return on Asset (ROA), Return on Equity (ROE), and Net Interest Margin (NIM) were adopted for the study. Based on the result of hausman test, Pool Mean Group (PMG) was applied to investigate the effect of Industry specific using industry concentration and Banking sector development on profitability. Result of the study indicates that banking sector development is statistically significant in influencing bank profitability. However, market concentration is not significant drivers of banks? profitability. The study recommended a better supervision of banks as well as encouragement of banking competition in order not to create oligopolistic competition in the banking sector and ensuring that banking services reach the nooks and crannies of the country. This will make the unbanked to be introduced to the banking system. The purpose of this study is to examine industry specific factors affecting Banks profitability in Nigeria as changes in profitability are an important contributor to economic progress via the influence profits have on the investment and savings decisions of companies, which will lead to improvement in cash flow position and greater flexibility for source of finance.

Keywords: determinant, industry, factors, banks profitability, Nigeria

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