EFFECT OF FINANCIAL SOUNDNESS ON BUSINESS EFFICIENCY OF LISTED BANKS IN NIGERIA

¹Anisi, Emmanuel Chukwuka, ²Alphonsus S. Anichebe and ³Innocent C. Nnubia

ABSTRACT

The study examined the relationship between financial soundness and business efficiency of listed banks in Nigeria. The specific objectives of the study were to: ascertain the effect of liquid assets ration operating expense ratio of listed banks; and examine the effect of capital ratio on operating expense ratio of listed banks in Nigeria. Ten (10) banks were selected from the banks listed on the Nigerian Exchange Limited (NEL). The data used were secondary data and were drawn from the selected bank’s annual report from 2012 to 2021 as are contained in the Nigerian Exchange fact book. The data collected were analysed using Ordinary Least Square Method. The results show that liquid assets ration and capital adequacy ratio have no significant effect on operating expense ratio of listed banks in Nigeria. The study recommends among others that, the regulatory agency such as the Central Bank of Nigeria should also formulate fiscal policy that will enable the listed banks to withstand unexpected financial shocks and also improve their performance; since this indicator analyzed the liquidity available to meet expected and unexpected demands for cash.

Keywords: Financial Soundness, Business Efficiency, Capital Adequacy Ratio, Liquid Assets Ratio.