MACROECONOMIC VARIABLES AND BANKS’ RETURN ON ASSETS IN NIGERIA
EHIEDU, Victor Chukwunweike
Department of Accounting, Banking and Finance, Faculty of Management Sciences
Delta State University, Asaba Campus
ehieduvc@gmail.com
ABSTRACT
This work focused on macroeconomic variables and banks’ return on assets linkage in Nigeria. Annual Reports of 10 (ten) Banks were used for the study. Zenith Bank Plc, FBN Plc, GTB Plc, UBA Plc, FCMB Plc, Access Bank Plc, Diamond Bank Plc, Fidelity Bank, Eco Bank Plc and Union Bank Plc. The explained variable was banks’ return on assets (ROAs) while the explanatory variables includeexchange rate (EXR), interest rate (INTR) and inflation rate (INFLR). The study utilized banks’ yearly data from 2009 to 2018. In analyzing the data, linear regression analysis was used as the statistical tool through SPSS 22.0. The results obtained showed that exchange rate (EXR), and inflation rate (INFLR) did not have significant impact on banks’ ROAs while interest rate (INTR) had an affirmative association with banks ROAs in Nigeria. The study submits that government should ensure banks in the country do not operate under harsh macroeconomic conditions. It also submits that the government should re-examine its exchange rate policies to incorporate the strategies with the sole aim of enhancing the local currency, specifically, by discouraging imported inflation and unfavorable exchange rate so that banks can attract good ROAs for her shareholders.
Keywords: Return on Assets; Exchange Rate, Interest Rate, Inflation Rate.