Aug 2026· Journal of Accounting and Financial Management· 0 citations
Abstract
This research investigated the impact of non-performing loan ratio (NPLR), loan loss provision
ratio (LLPR), and capital adequacy ratio (CAR) on the financial performance of Deposit Money
Banks in Nigeria from 2000 to 2024, using return on equity (ROE) as a performance indicator.
Employing an ex-post facto research design, secondary data were collected from the annual
reports of selected banks. The analysis utilized the Augmented Dickey-Fuller (ADF) unit root test,
Johansen cointegration test, and Error Correction Model (ECM) to evaluate both short- and long
term relationships among the variables. Findings indicate the existence of a long-run equilibrium
relationship among the variables, as evidenced by the error correction term ECM (-1), which
recorded a coefficient of -0.964289 and a significant p-value of 0.0066. This implies that
approximately 96.43% of short-run disequilibrium is corrected annually. In the short run, NPLR
(coefficient = 0.200765, p = 0.7856), LLPR (coefficient = 0.508688, p = 0.3621), and CAR
(coefficient = 0.260466, p = 0.9269) exerted positive but statistically insignificant effects on ROE.
The study concludes that although NPLR, LLPR, and CAR do not significantly influence bank
performance in the short run, a stable long-run equilibrium relationship exists among the
variables. The study therefore recommends strengthening loan monitoring and recovery practices,
improving loan loss provisioning policies, and maintaining adequate capital levels to support
sustainable profitability and financial resilience.
This study aims to analyze the effect of Non-Performing Loans (NPLs) and the Loan-to-Deposit Ratio (LDR) on Return on Assets (ROA) at banking companies listed on the Indonesia Stock Exchange for the period 2022–2024. This study employs a quantitative approach using secondary data in the form of banks’ annual financial reports. The sampling technique utilized purposive sampling, resulting in 15 banks selected as the study sample, comprising a total of 45 data observations. The analysis method employed is panel data regression using the Random Effects Model (REM) approach with EViews 13. The results indicate that NPL has a negative and significant effect on ROA. This indicates that as the level of non-performing loans increases, bank profitability tends to decline. Meanwhile, the LDR does not have a significant effect on ROA, suggesting that high levels of credit disbursement do not necessarily improve bank profitability. Simultaneously, both NPL and LDR have a significant effect on ROA.
Shafwan Juldan, V. Fattah, Cici Rianty et al.· Jurnal Manajemen Motivasi· 0 citations
This study investigates the impact of key financial ratios; Return on Assets (ROA); Loan-toDeposit Ratio (LDR), and Cost-to-Income Ratio (CIR) on the market valuation (proxied by Tobin's
Q) of listed Deposit Money Banks (DMBs) in Nigeria from 2015 to 2024. Utilizing panel data
regression with fixed effects and secondary data from five listed Nigerian DMBs, the analysis
addresses gaps in prior research by incorporating post-pandemic dynamics and regulatory shifts.
Diagnostic tests confirmed data suitability (unit roots, multicollinearity, heteroscedasticity), and
cointegration tests (Pedroni) established long-run equilibrium relationships. Results indicate that
ROA exerts a statistically significant positive influence on Tobin's Q (β = 0.221, p < 0.01),
underscoring the importance of profitability for market valuation. Conversely, CIR demonstrates
a significant negative relationship (β = -0.030, p = 0.008), highlighting the detrimental effect of
operational inefficiency. LDR exhibits a marginally positive but statistically weak association (β
= 0.018, p = 0.052), suggesting limited explanatory power for liquidity management. The model
explains 60.3% of the variance in Tobin's Q (Adjusted R² = 0.603, F-statistic = 19.46, p < 0.01),
confirming the collective significance of these ratios. The study concludes that profitability (ROA)
and operational efficiency (CIR) are primary determinants of market valuation in the Nigerian
banking sector, while liquidity (LDR) plays a secondary role. These findings align with signaling
theory, as positive financial metrics enhance investor confidence, and agency theory, as
managerial efficiency correlates with shareholder value maximization.
G. T. Akinleye· Journal of Accounting and Fi...· 0 citations
This study examines the effect of Non-Performing Loans (NPL), Loan-to-Deposit Ratio (LDR), and Capital Adequacy Ratio (CAR) on firm value proxied by Book Value per Share (BVS), with Return on Assets (ROA) as a mediating variable in banking companies listed on the Indonesia Stock Exchange during 2015–2024. This research employs a quantitative approach using panel data regression. The sample consists of 11 banks selected through purposive sampling, resulting in 110 observations. Data analysis was conducted using EViews 12 and the Sobel test to examine the mediation effect. The results show that NPL has a negative and significant effect on ROA and BVS. LDR has no significant effect on ROA but positively affects BVS. CAR has a positive effect on both ROA and BVS. Furthermore, ROA significantly increases BVS. Mediation analysis indicates that ROA does not mediate the effect of NPL and LDR on BVS but mediates the relationship between CAR and BVS. These findings highlight the importance of credit risk management, effective intermediation, and strong capital structures in enhancing banking firm value.
Yandi Asmana, Hari Gusrida, Yohanes Indrayono· Greenation International Jou...· 0 citations
The study examined the impact of interest rates on the financial performance of deposit money
banks (DMBs) in Nigeria. Interest rate was proxied with lending interest rate (LIR) and deposit
interest rate (DIR) alongside control variables such as inflation rate (INFR) and exchange rate
(EXHR), on the financial performance of deposit money banks (DMBs) in Nigeria, as proxied by
return on assets (ROA). Spanning a 34-year period from 1991 to 2024, the study employed an expost facto research design, utilizing secondary data sourced from the Central Bank of Nigeria
Statistical Bulletin and Annual Reports. Ordinary Least Squares (OLS) regression analysis was
conducted using E-Views 9.0, supported by diagnostic tests including the Variance Inflation
Factor (VIF), Durbin-Watson statistic, Breusch-Pagan-Godfrey heteroskedasticity test, Ramsey
RESET test, unit root test, and Johansen cointegration test. The findings revealed that LIR and
DIR have statistically significant negative effects on ROA, confirming that increases in both
lending and deposit rates reduce profitability. EXHR was also negatively significant, indicating
that currency depreciation impairs bank performance. However, INFR showed no statistically
significant effect on ROA. The study concluded that prudent interest rate management and
exchange rate stabilization are essential for improving the financial performance of banks. It
recommends enhanced risk assessment, technological investment, and periodic monetary policy
reviews to sustain profitability. The study contributes to existing knowledge by integrating both
interest rate and macroeconomic variables in analyzing bank performance in Nigeria over a longrun horizon and provide a foundation for future empirical inquiries into the interest rateprofitability nexus in developing economies.
Chiekem Jerry Ebinum· IIARD INTERNATIONAL JOURNAL...· 0 citations
This study examines the impact of capital adequacy ratio (CAR) on the performance of deposit
money banks in Nigeria. Capital adequacy, which reflects a bank’s ability to absorb financial
shocks and maintain stability, remains a critical indicator of financial soundness and regulatory
compliance. The study adopts a longitudinal research design using secondary data obtained from
the financial statements of eight (8) selected deposit money banks in Nigeria over a nine-year
period spanning 2014–2022. The analysis employs regression techniques to evaluate the
relationship between capital adequacy ratio (CAR) and bank performance, measured by Return
on Equity (ROE). Findings reveal that capital adequacy ratio has a positive relationship with bank
performance, with a regression coefficient of 0.058407, indicating that an increase in CAR leads
to an improvement in ROE. However, the relationship is statistically insignificant, as evidenced by
a p-value of 0.3346, suggesting that capital adequacy does not significantly determine the
performance of deposit money banks in Nigeria within the study period. The study concludes that
although higher capital adequacy enhances the capacity of banks to absorb losses and improve
profitability, its effect on performance is not statistically significant. It recommends that deposit
money banks strengthen their capital base while also improving credit risk management practices,
ensure strict compliance with regulatory requirements such as the Banks and Other Financial
Institutions Act (BOFIA) and prudential guidelines, and adopt efficient financial strategies to
enhance overall performance.
S. Gurowa· Journal of Accounting and Fi...· 0 citations
This study aims to examine the effects of Bank Size, Return on Equity (ROE), and Capital Adequacy Ratio (CAR) on Non-Performing Loans (NPL) in conventional banking companies listed on the Indonesia Stock Exchange (IDX) during the 2021–2025 period. NPL is one of the key indicators used to assess loan quality and the level of credit risk faced by banks. A high NPL ratio may weaken banking stability, reduce profitability, and undermine public confidence in the banking sector. Therefore, identifying the determinants of NPL is essential for maintaining sound banking performance and financial stability. The independent variables employed in this study are Bank Size, Return on Equity (ROE), and Capital Adequacy Ratio (CAR), while NPL serves as the dependent variable. This research adopts a quantitative approach using secondary data obtained from the annual financial statements of conventional banks for the period 2021–2025. The data were measured using a ratio scale, and the sample was selected through a purposive sampling technique. A total of 42 conventional banking companies listed on the Indonesia Stock Exchange were included in the study. Panel data regression analysis was used EViews 13 software. The most appropriate estimation model was determined through the Chow test, Hausman test, and Lagrange Multiplier test. The findings reveal that Bank Size, ROE, and CAR also significantly affects NPL. These results suggest that bank size, Return on Equity (ROE), and and Capital Adequacy Ratio (CAR) are important factors influencing credit quality and should be carefully managed to control banking credit risk.
Risky Fitriany, A. Fadjar· Media Ethics: Human Ecology...· 0 citations