International Conference on Economics, Finance & Business, London

MANAGERIAL EFFICIENCY AND PROFITABILITY OF DEPOSIT MONEY BANKS IN NIGERIA

AWOLAJA AYODEJI MUYIDEEN , AJAYI IBIDOLAPO EZEKIEL, OSASONA ADEDEJI VISCKER, OSASONA ADEDEJI VISCKER

Abstract:

This article investigated the relationship between managerial efficiency and profitability in Deposit Money Banks in Nigeria, focusing on the period from 2014 to 2023. Employing an ex-post facto design, the research analyzed historical data from the audited financial statements of a purposively selected sample of 10 listed banks. This methodology allows for an objective examination of how managerial efficiency impacts profitability metrics such as return on investment (ROI) and return on assets (ROA). The analysis incorporated descriptive statistics, correlation analysis, panel regression, and ANOVA to assess the efficiency-profitability dynamics within the sector. The findings revealed a significant positive relationship between the loan-to-deposit ratio (LDR) and the financial performance of Deposit Money Banks, with a coefficient of 0.6877 (p=0.000<0.05). Additionally, the findings indicated notable variation in both the managerial efficiency and return on investment across the sampled banks. These results underscore the importance of effective managerial practices in enhancing profitability within the Nigerian banking sector. Ultimately, the research concludes that a higher LDR positively influences the financial performance of Deposit Money Banks in Nigeria, suggesting that optimizing the allocation of deposits toward loans is a viable strategy for improving overall profitability.

Keywords: Managerial Efficiency, Profitability, Return on Investment, Loan to Deposit Ratio