Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/144791 
Year of Publication: 
2016
Citation: 
[Journal:] CBN Journal of Applied Statistics [ISSN:] 2476-8472 [Volume:] 07 [Issue:] 1 [Publisher:] The Central Bank of Nigeria [Place:] Abuja [Year:] 2016 [Pages:] 23-48
Publisher: 
The Central Bank of Nigeria, Abuja
Abstract: 
This study applied panel analysis to determine the factors influencing interest margins in Nigeria using bank-specific, sector-specific and macroeconomic data ranging from 2010:Q1 to 2014:Q2. Based on the Hausman test, a fixed effect model in a generalized form (GLS) was estimated. The result shows that credit risk, growth in loans and advances, staff operating cost, GDP growth, inflation rate and money supply growth are significant determinants of interest margins in Nigeria. Consistent with previous studies, staff cost exerts highest impact on interest margins followed by fixed effects term. Further analysis of the banks' fixed effects reveals that seven banks control about 64%, which raises a policy concern for banks' supervisors. The result also reveals that banks usually transfer their staff operating costs to customers by either imposing exorbitant lending rates or low deposit rates or both. This study recommends the formulation of strategies for reducing growing banks staff cost in the area of levels of compensation, employee turnover, redundancy, automation processes and outsourcing of non-critical tasks should be given due attention to ensure efficiency and competitive margin that could spur growth in Nigeria.
Subjects: 
Interest Margin
Panel Data Models
Weighted Least Squares
JEL: 
C23
E43
Document Type: 
Article

Files in This Item:
File
Size
712.28 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.