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Determinants of Bank Profitability and Basel Capital Regulation: Empirical Evidence from Nigeria

Ozili, Peterson (2015) 'Determinants of Bank Profitability and Basel Capital Regulation: Empirical Evidence from Nigeria.' Research Journal of Finance and Accounting, 6 (2). pp. 124-131. ISSN 2222-1697

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Abstract

This study, empirically, investigates the determinants of bank profitability. The debate on whether Basel capital regulation affects bank profitability continues to attract research interest among academics and policy makers, globally. I contribute to this debate by providing a country-specific study. Overall, I find that Basel capital regime had no significant effect on bank profitability. The result is significant because it lends support to the view that Basel capital regulation in different countries is modified to meet other prudential objectives relative to its intended objective - to reduce excessive risk-taking in banks. Second, after employing NIM and ROA profitability metrics, I find that the determinants of bank profitability, and its significance, depends on the profitability metric employed. Third, I find that loan quality significantly influences bank interest margin while bank size and cost efficiency significantly influences return on asset (ROA). Finally, bank capital adequacy ratio is observed to be a significant determinant of bank profitability.

Item Type: Article
Uncontrolled Keywords: Bank Profitability, Performance, Basel, Return on Asset, Net Interest Margin, Bank Regulation.
Subjects: H Social Sciences > H Social Sciences (General)
H Social Sciences > HB Economic Theory
H Social Sciences > HG Finance
Divisions: Faculty of Social Sciences > Essex Business School
Depositing User: Kitakogelu Ozili
Date Deposited: 23 Mar 2015 20:19
Last Modified: 24 Sep 2015 12:05
URI: http://repository.essex.ac.uk/id/eprint/13300

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