Periodic checking and evaluation of financial performance of the banking sector is a way of sustaining the development of a nations economy. The key indicators of the banks financial performance are their return on assets (ROA) and return on equity (ROE). ROA indicates the proportion of profit a company makes in relation to its assets while ROE measures a corporation's profitability with respect to the money shareholders have invested. A banks financial performance is affected by some specific factors like capital adequacy ratio (CAR), credit risk (CRISK), management quality, liquidity ratio (LIQ.RAT.) and bank size. This work models the effect of these factors on the overall financial performance of some sampled commercial banks in Nigeria using panel data regression approach. The fitted ROA model accounted for 83% of the total variability in the data and revealed that CAR, CRISK, and LIQ.RAT were significant at both 1% and 5% levels while the ROE model accounted for 69% and revealed that CRISK and LIQ.RAT were significant. The Guaranteed Trust Bank (GTB) had the highest average ROA, ROE and CAR throughout the period under review while Zenith bank was the best in terms of credit risk, management quality and liquidity ratio.
Key words: Financial Performance, Commercial Banks, Evaluation, Panel Data, Economy
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