Mountain Top University Library

The principal aim of every banking institution is to make a profit in order to maintain stability
and sustainable growth. The purpose of this study was to investigate the impact of economic
variables on the financial performance of Nigerian Deposit Money Banks. Internal and external
factors affect the performance of deposit money banks. The internal factor is the Bank specific
factor, while the external factors include the macroeconomic factors and the industry-specific
factor. The research population consists of 22 Deposit Money Banks in Nigeria according to the
list of deposit banks published by the Central Bank of Nigeria. A sample of five Deposit Money
Banks was drawn using stratified random sampling based on the criteria of banks with
international Authorization. The study adopted the ex post facto research design. The study made
use of secondary data extracted from the semi-annual audited report of the five banks
respectively and Central Bank Statistical Bulletins from the period of 2010-2019. The study used
regression and correlation analysis to test the relationship between Inflation rates, Treasury Bills
rates, loan to deposit ratio and financial performance of Deposit Money Banks, Return on Assets
(ROA) is used to represent the performance of Deposit Money Banks. The findings showed that
the inflation rate and treasury bills rate had no statistically significant impact on the return of
assets which signifies the performance of the banks but the loan to deposit ratio had a mild
significant impact on the return of assets which signifies the performance of the banks. However,
there exists a positive relationship between inflation rate and financial performance but a
negative relationship between treasury bills rate and financial performance and loan to deposit
ratio and financial performance. The study recommended that the banks should maintain a
moderate loan to deposit ratio by regulating the way they give out loans. And the regulators
should increase their inspection on the affairs of banks so that they will conform to various
circulars and policy statement that affects the banking industry.