Licensed under Creative Common THE INFLUENCE OF INTEREST RATE RISK ON THE PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

F Kolapo, Dapo Fapetu
2015 International Journal of Economics, Commerce and Management United Kingdom   unpublished
Banks perceive interest rate as either the price of deposits on one hand and cost of borrowing on the other hand. It performs a major function of rationing limited available financial resources (credit) among numerous competing demands. This study makes inquiry into the influence of interest rate risk on the performance of DMBs in Nigeria between 2002 and 2011, using a sample consisting of 6 tier 1 capital banks. The regression model specifies return on assets to measure bank performance as a
more » ... performance as a function of interest rate risk indexed with loans to asset ratio, average lending ratio, and risk of interest diversity. Employing fixed effect regression method, each measure of interest rate risk is found to have insignificant effect on bank performance. It is also found that interest rate risk weakly determines changes in return on assets; hence, it does not possess significant influence on bank performance.
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