Original Research Article | OPEN ACCESS
Non-Interest Income and Financial Performance of Selected Deposit Money Banks in Nigeria

Emmanuel Uniamikogbo1 , Emma I. Okoye2, Sunday Amos Adeusi3, Meshack Aggreh4

1Department of Accounting, Rhema University, Aba, Abia State, Nigeria; 2,4Department of Accountancy, Nnamdi.Azikiwe University, Awka, Anambra State; 3Department of Accounting, Adekunle Ajasin University, Akungba-Akoko, Ondo State.

For correspondence:-  Emmanuel Uniamikogbo   Email: uniamikogbo_emmanuel@rhemauniversity.edu

Received: March 19, 2020        Accepted: March 31, 2020        Published: March 31, 2020

Citation: Uniamikogbo E, Okoye EI, Adeusi SA, Aggreh M. Non-Interest Income and Financial Performance of Selected Deposit Money Banks in Nigeria. Account Tax Rev 2020; 4(1):85-103 doi:

© 2020 The authors.
This is an Open Access article that uses a funding model which does not charge readers or their institutions for access and distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0) and the Budapest Open Access Initiative (http://www.budapestopenaccessinitiative.org/read), which permit unrestricted use, distribution, and reproduction in any medium, provided the original work is properly credited..

Abstract

This study broadly examined the effect of non-interest income on the financial performance of selected Deposit Money Banks (DMBs) in the Nigerian banking sector. Explicitly, e-banking income, fee income and firm size were proxied for non-interest income (independent variable) and market value added (dependent variable) was proxied for financial performance. The eight (8) banks categorised by Central Bank of Nigeria 2014 to be Domestic Systematically Important banks (D-SIBs) out of the 16 Deposit Money Banks (DMBs) listed in the Nigerian Stock Exchange (NSE) as at 31st December 2017 were selected using the purposive sampling technique. Data were collected from the annual reports & accounts and the Nigerian Stock Exchange website respectively. The study covered a period of eleven (11) years (2008-2018). The statistical tools employed were descriptive statistics and econometric analysis. This study used the Panel Data Analysis method in the econometric analysis. Findings from the study revealed that e-banking income and fee income each has a significant positive effect on market value added of DMBs in Nigeria. However, firm size has a significant negative effect on market value added of DMBs in Nigeria. It is recommended that banks in Nigeria should further develop its internet and other electronic platforms that can improve its income from e-banking operations since e-banking income is shown to be a strong and emerging component of non-interest income that boosts banks’ performance (market value added).If the goal of the bank is to promote banks’ performance, it should be more mindful of the means of acquiring non-interest income since its performance depends on the channels used to generate non-interest income for the bank. Lastly, larger and investment-oriented banks should focus more on increasing their share of interest income rather than non-interest income to become more stable and contribute more appropriately to the Nigerian economy.

Keywords: Non-interest income, fee, e-banking, firm size, banking sector, market value added


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