Exploring the Determinant Factors of Bank's Net Earnings

The paper examines the determinants of bank net earnings defined as profit after tax and deductibles in selected banks in Nigeria. Data used were extracted from balance sheets and income statement accounts and analyzed with the Ordinary Least square regression model. The results confirmed that custo...

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Published in:Asian economic and financial review 2012-06, Vol.2 (2), p.330
Main Author: Nnenna, Okoli Margaret
Format: Article
Language:English
Subjects:
Balance sheets
Bank earnings
Bank reserves
Banking industry
Commercial banks
Deregulation
Developing countries
Economic value added
Financial services
GDP
Gross Domestic Product
Hypotheses
Industrialized nations
Interest rates
LDCs
Loans
Monetary policy
Profitability
Profits
Regulation of financial institutions
Reserve requirements
Return on assets
Variables
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description The paper examines the determinants of bank net earnings defined as profit after tax and deductibles in selected banks in Nigeria. Data used were extracted from balance sheets and income statement accounts and analyzed with the Ordinary Least square regression model. The results confirmed that customer's deposits and reserves all impacted positively on the net earnings but only one bank's customers deposit was statistically significant. Also the reserves of two banks were significant. Other variables like loan and advances was negatively related to net earnings contrary to a prior expectation but one bank's loan and advances was statistically significant. Lastly, bad and doubtful debt has the negative expected sign with two banks being statistically significant. Overall the fit of the model was good. It was therefore recommended that banks should be prudent in advancing loans to their customers.
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subjects Balance sheets
Bank earnings
Bank reserves
Banking industry
Commercial banks
Deregulation
Developing countries
Economic value added
Financial services
GDP
Gross Domestic Product
Hypotheses
Industrialized nations
Interest rates
LDCs
Loans
Monetary policy
Profitability
Profits
Regulation of financial institutions
Reserve requirements
Return on assets
Variables
title Exploring the Determinant Factors of Bank's Net Earnings
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