Macroeconomic Variables and the Financial Performance of Tier-1 Banks in Nigeria
Eguavoen Jeffrey Ogie
Department of Finance, University of Benin, Benin City, NigeriaOgie-Eguavoen Ifelunwa
Department of Entrepreneurship, University of Benin, Benin City, NigeriaKeywords: Macroeconomic variables, Financial performance, Tier-1 banks
Abstract
The study empirically investigated the relationship between macroeconomic variables and the financial performance of tier 1 banks in Nigeria for the period 1995 to 2021 (27 years). The ordinary least square (OLS) technique was employed in the analysis of data, and the results obtained there from revealed that money supply (MS) and foreign direct investment (FDI) have significant positive relationship with the financial performance of tier 1 banks (BPERF) in Nigeria; exchange rate (EXCHR) has a significant negative impact on the financial performance of tier 1 banks in Nigeria; inflation rate (INFLR) and gross domestic product (GDP) has insignificant positive relationship with tier 1 banks financial performance in Nigeria. The study recommends that, since money supply (MS) has a significant positive relationship with the financial performance of tier 1 banks in Nigeria, monetary authority (Central Bank of Nigeria) should either sustain current monetary policy or improve on it in order to continue to strengthen the banking sector with enough cash that will in turn be made available to the real sector of the economy in form of loans and advances.
