DETERMINANTS OF PUBLICLY QUOTED BANKS’ EARNINGS IN NIGERIA: THE ROLE OF PANDEMIC

Abstract

This study examined the determinants of banks’ earnings and the moderating role of pandemic in Nigeria. Ex-post facto research design was employed and secondary data comprising capital adequacy ratio, liquidity ratio, volume of loans granted, bank size and age were obtained from the audited financial statements of the sampled listed banks while pandemic variables comprising COVID19, Lassa fever, Yellow fever, Avian influenza, Cholera and meningitis were collected from the Nigeria Centre for Disease Control from 2013-2+/*022.  Data obtained were analyzed using the fixed and random effects panel data regression and findings indicated that capital adequacy, liquidity, and age are vital determinants of banks’ earnings.  Also, it was shown that pandemic played a major moderating role on the relationship between the determinants of the study and banks’ earnings in Nigeria. Meanwhile, a rise in their loan-granting volume will result in a -0.058991 decrease in the volume of earnings (ROA) that banks anticipate during the pandemic whereas LOTA's P-value is (P>/t/= 0.0616). This justifies that, the loans that the banks made throughout the pandemic era are not a major determinant for forecasting the earnings (ROA) of the banks throughout that reign of epidemic. The analysis also confirmed that banks from the earlier generation recorded lower returns on assets (ROA) during the epidemic. The study concludes that, the major determinant of earnings during the pandemic periods, from amongst the variables considered is the capital adequacy position of the bank, liquidity and bank age. In view of the findings, the management of large-sized banks should curtail volume of transactions in periods of pandemic in order to reduce the negative effect it may yield on earnings

Keywords: COVID19 Pandemic; Bank Earnings; Size; Age; Liquidity Ratio; Capital Adequacy               Ratio; Loans And Advances.

JEL Classification:G21; M49