Determinants of Bank Profitability and Basel Capital Regulation: Empirical Evidence from Nigeria

Ozili, Peterson K (2015): Determinants of Bank Profitability and Basel Capital Regulation: Empirical Evidence from Nigeria.

Abstract

This study, empirically, investigates the determinants of bank profitability. Overall, I find that the Basel capital regime had no significant effect on bank profitability. This result is significant because it lends support to the view that modified Basel accord in different countries might be aimed to meet other prudential objectives other than the intended objective - to reduce excessive bank risk-taking. Second, after employing NIM and ROA profitability metrics, I find that the determinants of bank profitability, and its significance, depends on the profitability metric employed. Third, I find that loan quality significantly influences bank interest margin while bank size and cost efficiency significantly influences return on asset. Finally, bank capital adequacy is observed to be a significant determinants of bank profitability.

• Item Type: MPRA Paper
• Language: English
• Keywords: Bank Profitabilty, Basel Capital Regulation
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; G - Financial Economics > G2 - Financial Institutions and Services; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages; N - Economic History > N2 - Financial Markets and Institutions; N - Economic History > N2 - Financial Markets and Institutions > N20 - General, International, or Comparative; N - Economic History > N2 - Financial Markets and Institutions > N27 - Africa ; Oceania

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