CORPORATE DIVERSIFICATION AND PERFORMANCE OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA: EVIDENCE FROM MACROECONOMIC VARIABLES

Osagie Osifo, Ph.D and Felix Eromosele Obainoke
Volume 1 Issue 1

Abstract

Aim/purpose– In order to increase financial performance and reduce financial risk exposure, most deposit money banks in Nigeria embraced corporate diversification within the ambit of macroeconomic factors. This paper, therefore, examines effect of corporate diversification and selected macroeconomic factors on the performance of deposit money banks. Design/methodology/approach-The purposive sampling technique was adopted in this paper and data were sourced from sampled deposit money banks audited financial statements and central bank of Nigeria statistical bulletin of diverse publications for the macroeconomic variables. The panel regression technique was used in estimating the variables in addition with hausman test. Findings-The result reveals that subsidiary diversification, income diversification and exchange rates are central factors that increase performance of DMBs in Nigeria regardless if random effect or fixed effect is considered. In the same vein, foreign diversification and interest rate shows negative impact on the performance of DMBs in Nigeria. Research implications/limitations-The intention was to use the entire deposit money banks in Nigeria, but unfortunately some of the banks are not still listed in the Nigerian stock exchange. The banks not listed on the bourse are not compelled by the voluntary sustainability report guidelines to disclose all relevant data about their operations. Originality/value/contribution-`This research focused on the effect of corporate diversification, macroeconomic factors and performance of deposit money banks in Nigeria. This study is novel because it was able to inculcate macroeconomic factors as explanatory variables which prior studies did not consider and it has also added to the body of literature of corporate diversification. Keywords: Deposit Money Banks, Corporate Diversification, Exchange Rate, Hausman Test, Performance

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