EFFECT OF REGULATION ON THE PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

Oboro Oghenero Godday and Edafiaje Lisa Aninoritse

Department of Banking and Finance,

Delta State Polytechnic, Ozoro

E-mail: rawlings4good@yahoo.com

ABSTRACT

The study examined the effect of regulation on the performance of deposit money banks in Nigeria. The study used secondary data derived from Central Bank of Nigeria Statistical Bulletin and Annual Reports of deposit money Banks in Nigeria. Multi-regression was employed in the Analysis of the data collected. E-view 7.0 econometric results shows that inflation, maximum lending rate and real interest rate have negative and significant effects on the profitability of Nigerian deposit money banks as measured by return on assets at 5% level of significant effect on bank’s performance. Also, the study found that real interest rate, treasury bill rate and minimum rediscount rate do not have significant effect on return on equity of money deposit banks in Nigeria. Therefore, the study recommended that the regulatory authorities should tackle inflation seriously as it is militating against the efficiency of the Nigeria banking system. Also, the lending rate of banks should not be too high as this will adversely affect their performance in the long-run.

Keywords: Bank Regulation, Interest Rate, Treasury Bill Rate, Minimum Rediscount Rate.