The Long-run Macroeconomic Determinants of Banks' Performance in Nigeria

Abstract

Banks and the banking sector of every economy in terms of their intermediation role are regarded as the epicenter of development financing. But due interference of macroeconomic fundamental, the effectiveness and potency of this role can be somewhat hampered. Hence, the focus of this study is to identify the long-run macroeconomic determinants of banks performance, and to empirically model the link between banks and the long-run macroeconomic determinants of their performance. Time series data on both banks performance and macroeconomic indicator for Nigeria  for the period 1990 to 2020 were used in validating our models. The study applied the unit root and Johansen cointegration tests in an innovative and robust manner. This study focused on the evaluation and investigation of the long-run macroeconomic determinants of banks performance in Nigeria. This gamut of the body of studies investigating the long-run macroeconomic determinants of the performance of banks in Nigeria is one of the most important because the results obtained from it would highlight the core macroeconomic determinants of the performance of banks in the Nigerian banking sector. This would act as empirical guide to monetary authorities and regulatory institutions when formulating and/or implementing banking sector reforms in particular and policies in general.

Keywords: Banks, Macroeconomic Determinants, Long-run, Nigeria