Open AccessDynamics of capital adequacy and profitability of internationalized deposit money banks in Nigeria
Author(s) -
Nenubari Ikue John,
Emeka Nkoro
Publication year - 2019
Publication title -
international journal of business ecosystem and strategy
Language(s) - English
Resource type - Journals
ISSN - 2687-2293
DOI - 10.36096/ijbes.v1i4.284
Subject(s) - profitability index , return on assets , asset (computer security) , business , capital adequacy ratio , panel data , monetary economics , finance , economics , econometrics , microeconomics , computer science , incentive , computer security
The study examined the dynamic responses of profitability indexes to capital adequacy ratios of authorized internationalized deposit money banks in Nigeria. The data were sourced from the financial year books of the deposit money banks and analyzed with static and dynamic panel estimators. The static estimator shows that the banks have differences in managerial style, size and profitability. Also, it was revealed that return on asset and return on equity responded positively to asset size, efficiency of the use of asset and current ratio in the static models and they were highly significant. However, they were insignificant in the dynamic specifications except asset size that was significant in the return on asset model showing a weak dynamic response of profitability to capital adequacy ratios. Hence the study recommended that Banks should improve their share based as to increase the asset as this will improve profitability.