IMPACT OF SHARE PRICE ON DEPOSIT MONEY BANKS PROFITABILITY IN NIGERIA

ABSTRACT Share prices of Nigeria banks in the last two decades have remained ridiculously low for a sector believed to be performing optimally well. Capital market data in Nigeria shows that the average price of bank shares over the past 10 years has been N25.00. The purpose of this study is to determine the influence of stock prices on the profitability of depository banks in Nigeria. The study used secondary data and the scope of the study include randomly selected twelve (12) deposit money banks for ten (10) years. All variables were subject to unit root using the EViews software. Both total asset, and age of bank and stock price are transformed using natural logarithms (ln) that resulted in LogTAST, logAGB and log YSPR. The findings revealed that stock price has a strong relationship with total asset (TAST) in the banking sector; so is net interest margin (NIM) and average return on equity (ROAE). Return on average assets (ROAA) and bank age (LnAGB) are generally insignificant and have a negative relationship with banking industry stock performance. The study concluded and recommended that Nigeria deposit money banks (NDMB) need to strengthen their balance sheets activities, placing more emphasis on long term investments and deposits which will serve to improve their share price on the capital market.

1 28 Jun, 2024

pg: 13

JBMIC PORTAL SYSTEM

Contri. 3+