Bank-Based Financial Architecture and Bank Performance: Evidence from Nigeria

Mohammed Hammajumba, Chinedu Bernadine Ezirim , Ebele Patricia Ifionu — Mon, 24 Mar 2025 00:00:00 +0000

This study investigated the relationship between bank-based financial architecture and bank performance in Nigeria using quarterly data over the period 2010: Q01 – 2022: Q04. Specifically, the study examined how cash reserve ratio, monetary policy rate, stated lending rate, stated deposit rate, capital adequacy ratio, leverage ratio, and net stable funding ratio influence the rate of credit generated in Nigeria. The study utilized the descriptive statistics, unit root, generalized linear model, Johansen co-integration test, VEC-Granger causality and vector error correction techniques to analyze the data collected from the Central Bank of Nigeria and World Bank Development Indicators Statistics bulletin of various issues at the 5% significance level. The study showed that all the variables were integrated at first difference; thus, requiring the Johansen co-integration that validates the presence of long-run relationship among the variables. The result showed that bank-based financial architecture significantly influences bank performance of Nigeria. Both the short- and long-runs, all the indicators of financial architecture jointly caused substantial performance in banking intermediation operations. The study concluded that the combination of the domestic and international financial architectural postscripts brings about positive and considerable boost to banking intermediation of Nigeria. Thus, amongst others, the study recommended that increasing the net stable funding ratio and leverage ratio to always remain above the established means of 58.02% and 10.07% respectively, would be a policy in the right direction.

Contemporary Journal of Banking and Finance

Bank-Based Financial Architecture and Bank Performance: Evidence from Nigeria