The Determinants of Profitability among Deposit Money Banks (DMBS) in Nigeria Post Consolidation

Kenny Adedapo Soyemi¹, Lanre Akinpelu² and Jumoke Omowunmi Ogunleye³

¹Department of Accounting, Olabisi Onabanjo University, Ago Iwoye, Ogun State, Nigeria.

²Department of Accountancy, Federal Polytechnic, Ilaro, Ogun State, Nigeria.

³Department of Accounting, University of Lagos, Akoka, Lagos state, Nigeria.

Corresponding Author’s Email: soyemikenny@yahoo.com; 

Tel:+234-803-377-4560

Accepted 13 August, 2013

Abstract

This paper examines factors influencing profitability among Deposits Money Banks (DMBs) in Nigeria. Five internal determinants were identified and deployed, three of these variables were found to contribute to variation of bank profitability: bank size which is measured by log of total assets, is negative and significantly related to profitability of bank; capital adequacy ratio is also negatively related to and statistically significant to variation in bank profitability. The external determinants of financial structure and macroeconomic variables adopted depict no significant influence on profitability. Our findings suggest that some banks in Nigeria may be suffering from diseconomy of scale which is as are result of inefficiencies that may be associated with large complex organizations. This study also shows that management expenses, current and saving deposit accounts variables does not have any effects on bank profitability variation.

Keywords: Profitability, Deposits Money Banks, Post-Consolidation, Nigeria.