Impact of assets and liability on the efficiency of banks in Nigeria

Abstract

To demonstrate the extent to which key bank performance indicators influence the bank's net interest margin, the research gauge the assets and liability of bank by use of: capital ratio (BACAR); Bank Loans (BLOAN); Asset Quality (BAQUA); Bank Deposits (BADEP); Deposit Rate (BDERA) and Bank Interest Spread (BISPE). The ex post facto research design was used. Whereas, quantitative data analysis was employed. The design involved the collection of secondary time series data from online data base. The population comprised banks while commercial banks serve as sample. The published CBN statistical Bulletin and World Bank indicators for the financial period of 1993 through 2022 were used. Results show that BACAR, BLOAN, BAQUA and BDERA has significant and beneficial values. BADEP shows negative but not significant values. BISPE confirms negative but not significant values). The regressed model clarifies 62.88% changeability in the net interest margin (R-squared = 0.6288), and the model is statistically significant. Sequel to the results, the study recommends that banks should prioritize increasing their capital base to improve risk supervision and boost profitability. Governing authorities should authorize that banks maintain adequate capital buffers. Banks should seek to increase their loan portfolios by exploring new credit markets and improving the creditworthiness of potential borrowers.