REVISITING THE DETERMINANTS OF BANK PERFORMANCE IN NIGERIA: THE ROLE OF BANK SIZE AND MACROECONOMIC VARIABLES

Abstract

This study investigated the deposit money banks’ (DMBs) and financial performance in Nigeria during a 21-year span, from 2004 to 2024. The study specifically examined whether the bank size, monetary policy rate and inflation rate have a substantial impact on the financial performance of DMBs. Secondary data from the annual financial statements of eight chosen deposit money banks in Nigeria were used in the study. Panel regression analysis and ordinary least squares were used to analyze the data that were produced. The study revealed that bank size has a significant negative impact on financial performance of DMBs in Nigeria, monetary policy rate do not exert any significant impact on the financial performance of DMBs in Nigeria and inflationary pressures have no significant impact on the financial performance of DMBs in Nigeria. . In conclusion, the study established that bank specific factors such as bank size critically shapes bank financial performance, while the macroeconomic variables of monetary policy rates and inflation do not significantly affect bank performance. The policy direction is to therefore, improve internal efficiency and ensure optimal scale management rather that solely relying on macroeconomic conditions.