Capital Base and Operational Efficiency in Nigerian Deposit Money Banks (Evidence from a Two-Way Fixed Effect Approach)

Olarewaju, Odunayo Magret

Authors

Olarewaju, Odunayo Magret

Keywords:

capital adequacy, core capital, two-way fixed effect, operational efficiency, deposit money banks

Abstract

This paper evaluated the influence of capital base of banks on the level of operational efficiency of banks in Nigeria for the period 2004-2013, with a view to providing information on financial ratio analysis as a measure of banks' operational efficiency and how adequate is the capital adequacy of banks' policy to significantly spur the level of their operational efficiency. Secondary data extracted from annual report and accounts of the fifteen purposively selected quoted banks were employed. Data were analysed using measures of central tendency and twoway fixed effect regression technique. Findings from the analysis showed that debt to total equity (t = -3.17, p< 0.05), core capital ratio (t = 4.65, p< 0.05), bank risk (t = -3.89, p< 0.05) were significant in evaluating the influence of capital adequacy on operational efficiency of the Nigerian money deposit banks.

Downloads

How to Cite

Capital Base and Operational Efficiency in Nigerian Deposit Money Banks (Evidence from a Two-Way Fixed Effect Approach). (2016). Global Journal of Management and Business Research, 16(D1), 1-11. https://journalofbusiness.org/index.php/GJMBR/article/view/1958

Download Citation

References

. Aikaeli (2008) Commercial Banks Efficiency in Tanzania. (1).

M Ajlouni, H Omari (2010) Performance Efficiency of the Jordanian Islamic Banks using Data Envelopment Analysis & Financial Ratio Analysis. 3(1), 271-281.

H Armer, W Moustafa, T Eldomiaty (2011) Determinants of operating efficiency for lowly & highly competitive banks in Egypt. 33.

O Ayodele (1988) The Nigerian Banking & Financial Environment: Bank of Nigeria. 4(1), 1-18.

T Beck, R Levine, L Norman (2000) Finance & sources of growth. 46, 31-77.

Allen Berger, Loretta Mester (1997) Inside the black box: What explains differences in the efficiencies of financial institutions?. 21(7), 895-947.

R Eisenbeis, G Gilbert (1985) Market discipline & the prevention of bank problems & failure. 1(3), 27-42.

E Fama (1965) The Behaviour of Stock-Market Prices. 38(1), 34-105.

E Fama (1970) Efficient Capital Markets: A Review of Theory & Empirical Work. 25(3), 383-417.

Adeduro Ogunmakin, Bamikole Samson Fajuyagbe, Micah Juwon Akinleye (2000) Adoption of International Financial Reporting Standards (IFRS) and Financial Performance of Deposit Money Banks in Nigeria. 20(1), 155-175.

Ihsan Isik, M Hassan (2002) Cost and Profit Efficiency of the Turkish Banking Industry: An Empirical Investigation. 37(2), 257-279.

I Isik, M Hassan (2003) Efficiency, ownership & market structure, corporate control & governance in the Turkish banking industry. 30, 1363-1421.

F Ismail, R Rahim, M Majid (2009) Determinants of Efficiency in. 3(2), 291-302.

M Karimzadeh (2012) Efficiency analysis by using Data Envelop Analysis Model: Evidence from Indian Banks. 2(3), 228-237.

Daesik Kim, Anthony Santomero (1988) Risk in Banking and Capital Regulation. 43(5), 1219.

S Kwan (2003) Operating performance of banks among Asian economies: An international & time series comparison. 27, 471-489.

S Kwan, V Eisenbeis (1995) An Analysis of Inefficiencies in Banking. 19(3-4), 733-739.

M Ncube (2009) Fostering Development in an Era of financial & Economic Crises.

Frances Obafemi, Olumide Ayodele, Friday Ebong (2013) The Sources of Efficiency in the Nigerian Banking Industry. 2(4), 78-91.

R Odunga, P Nyangweso, D Carter, M Mwarumba (2013) Credit Risk, capital adequacy & operational efficiency of commercial banks in Kenya. 2(9), 6-12.

D Oke, I Poloamina (2012) Further Analysis of Bank Efficiency Correlates: The Nigerian Experience. 2(4), 1-11.

S Oluyemi (1996) The implication of banks' profitability on implementing the risk based capital requirement. 2(3), 45-56.

(2004) Capital adequacy ratios for banks-simplified explanation & examples for calculation.

A Said (2012) Islamic Banking versus Conventional Banking. 10(23), 227-297.

A Samad (2004) Bahrain Commercial Bank's Performance during 1994-2001. 10(1), 33-40.

Benito Sanchez, M Hassan, James Bartkus (2013) Efficiency Determinants and Dynamic Efficiency Changes in Latin American Banking Industries. 6(1), 282-294.

A Santomero, J Vinson (1977) Estimating the probability of failure for commercial banks & banking system. 1, 185-205.

L Sanusi (2010) The Nigerian banking industry: What went wrong & the way forward. Being an address delivered at the convocation Square.

S Sharma, D Raina, S Singh (2012) Measurement of Technical Efficiency & its sources: An Experience of Indian Banking Sector. 6(1), 35-57.