Spillover of COVID-19 on the Performance of Deposit Money Banks in Nigeria

  • Ibidolapo Ezekiel AJAYI
  • Samuel Obafemi DADA
Keywords: COVID-19, Capital Adequacy, Liquidity, Profitability, Return on Assets, Nigeria Deposit Money Banks

Abstract

This study assessed the spillover of COVID-19 on the performance of deposit money banks in Nigeria. Specifically, the study assessed effect of liquidity, profitability and capital adequacy on the performance of deposit money banks in Nigeria before and during the pandemic. The causal comparative research design was used in the study. Secondary panel data spanning covering 2017-2018 and 2019-2020 respectively was pooled in the study. Data gathered was estimated using descriptive statistics, multicollinearity test; pooled OLS estimation and post estimation tests. Discoveries from the study revealed that return on equity exerts positive significant impact on the performance of deposit money banks before the pandemic and during the pandemic that return on equity affects return on assets negatively and significantly with coefficient estimate of .0267839 (p=0.07<0.05) and -.0051766 (0.038<0.05) respectively; capital adequacy ratio before COVID-19 exerts negative significant impact on the performance of deposit money banks and during the pandemic the ratio also exerts negative significant effect with coefficient estimate of -.0068171 (p=0.044<0.05) and -.0063416 (p=0.032<0.05) respectively and prior to the pandemic; liquidity ratio exerts positive insignificant impact on the performance of deposit money banks in Nigeria and during the pandemic liquidity ratio exerts negative significant impact on the performance of deposit money banks in Nigeria with coefficient estimate of .3234067 (p=0.098>0.05) and -.111219 (p=0.051=0.05). Hence, the study suggested adequate monitoring of the capital adequacy, liquidity and leverage limit of Nigeria deposit money banks be caused by the Central Bank of Nigeria; the management of Teir 1 asset portfolio should be regularly assessed and reviewed by the Central Bank of Nigeria and Central Bank of Nigeria should introduce a standard capital adequacy ratio that will ensure the effectual usage of banks assets.
Published
2022-10-14
Section
Articles