Interest Rate Spread And Deposit Money Banks Profitability In Nigeria

ABSTRACT

Deposit money banks (DMBs) roles make them an important phenomenon in economic growth and development. This research work set out to investigate interest rate spread and deposit money banks profitability in Nigeria. The study employed multiple regression models using annual data from 1981 to 2015.Results obtained shows that demand deposit by private sector is statistically significant and a positive relationship with bank profitability. Results equally show that domestic interbank claim is statistically significant and has an inverse relationship with interest rate spread in Nigeria. DMBs risk is very statistically significant and has inverse relationship with bank profitability. Results also show that reserve fund conforms to apriority expectation but it is not a significant factor affecting interest rate spread in Nigeria. The policy implication of these findings are that oversights regulations have to be strengthened, while high lending rate has to be checked to keep loanable funds accessible as this would enhance DMBs profitability level.