EFFECTS OF SELECTED ECONOMIC VARIABLES ON THE PROFITABILITY OF QUOTED COMMERCIAL BANKS IN NIGERIA

The objective of this study is to examine selected economic variables on profitability of quoted commercial banks in Nigeria for the period of 2009-2018. Four proxies of selected economic variables used in this study are credit risk, loan to asset ratio, banking system development and inflation rate, while return on asset was used as proxy for profitability. Ex-post facto research design was adopted for this study. Secondary data were collected from the individual financial reports of the quoted commercial banks. This study used OLS regression technique and Wald test to analyse the data. The findings showed that loan to asset ratio have significant effect on profitability. Credit risk has insignificant effect on profitability. While banking system development has significant effect on profitability, while inflation rate had insignificant effect on profitability. In the overall, loan to asset ratio and banking system development remains a driver of profitability among quoted commercial banks in Nigeria as the F-statistics shows a good fit. It was recommended that efficient and effective loan management should be adopted by bank managers to ensure that banks do not become insolvent. Also, banks should be encouraged to enter other local market as well as strategically operate in other international markets and economies. While macroeconomic policies should be used to promote low inflation and pul other macroeconomic variables in check to have good impacts on bank profitability and development.