EFFECT OF ECONOMIC ENVIRONMENT ON PROFITABILITY OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA

This study examines the effects of Economic Environment on profitability of quoted Deposit Money Banks in Nigeria due to the problem of fluctuating profitability and losses in the sector. Ex-post facto research designs were used for the study. The population of the study is the twelve (12) quoted DMBs in Nigeria as at 2020. Panel regression analysis was used on panel data collected from the CBN Statistical Bulletin and the Annual reports and accounts of the sampled banks for the period spanning 20 11 through 2020. The study utilizes Interes t rate, Inflation rate, and Exchange Rate and regressed against profitability in terms of ROA as explained variable. It was found from the panel regression result that interest rate is negatively related to profitability with statistical significance. In t he case of inflation rate and profitability of quoted DMBs in Nigeria, the study finds an insignificant negative relation. Exchange rate reveals a significant positive effect on profitability of quoted DMBs in Nigeria. The study recommends among others tha t, Quoted DMBs in Nigeria should intensify efforts to reduce the lending rate to customers with a view to encouraging them to borrow since most of these banks depend on lending to customers to generate more revenue or income.