Environmental Factors and Bank Performance In Nigeria: A Panel GMM Approach

Authors

  • Gbenga Festus Babarinde Modibbo Adama University
  • Idera Tajudeen Abdulmajeed Nassarawa State University Keffi
  • Matthew Oladapo Gidigbi Modibbo Adama University

Keywords:

Banks and Economic Growth, Exchange Rate, Public Expenditure, Interest Rate, Panel GMM

Abstract

This paper examines the impact of environmental factors on bank performance in Nigeria. Specifically, the study sought to determine the impact of the exchange rate, gross domestic products growth, government expenditure, and the interest rate on the performance of selected Deposit Money Banks (DMBs) in Nigeria using annual data sourced from CBN statistical Bulletin, annual reports and accounts of the 12 randomly selected DMBs from 2009 to 2018. The panel GMM approach was used in estimating the specified relationship among the variables. They found that gross domestic product growth, interest rate, and government expenditure have a positive significant impact on the performance of the banks. Among all the variables, government expenditure contributes more to the earnings per share (EPS) of the selected banks.  The study, therefore, concludes that interest rate, gross domestic product, and government expenditure are strong determinants of the performance of banks in Nigeria. It can be recommended that banks should be creative within legal bounds in their interest rate management. Banks should continuously focus on the fiscal policy of the government, especially on the expenditure side, and use this as a guide in their policymaking and decisions. Banks should roll policies, products, and services on development finance that are capable of stimulating the economic growth of Nigeria.

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Published

2024-02-29

How to Cite

Babarinde, G. F., Abdulmajeed, I. T., & Gidigbi , M. O. (2024). Environmental Factors and Bank Performance In Nigeria: A Panel GMM Approach. The International Journal of Accounting and Business Society, 31(3). Retrieved from https://ijabs.ub.ac.id/index.php/ijabs/article/view/781