Impact of bank characteristics on the financial performance of deposit money banks
Purpose: This study empirically investigates the relationship between key bank characteristics—capital adequacy, asset quality, board independence, and liquidity—and the financial performance of Nigerian deposit money banks (DMBs), proxied by return on assets (ROA). Methodology: The study employed an ex-post facto research design, utilizing panel data from 14 quoted DMBs over a 10-year period (2009–2018). Data were sourced from the banks' annual reports and analyzed using pooled ordinary least squares (OLS) regression, preceded by diagnostic tests including correlation analysis, descriptive statistics, and normality tests. Results and Conclusion: The findings reveal that capital adequacy and board independence have a significant positive relationship with ROA, while asset quality and liquidity demonstrate an insignificant negative relationship. Firm size also showed a significant positive effect. The study concludes that strong capital buffers and independent boards are vital for profitability. Implications of findings: The implications of the findings are threefold: for bank management, there is a clear need to prioritise capital strength and board composition over excessive liquidity hoarding; for regulators, stricter governance codes and capital compliance enforcement are warranted; and for policymakers, the results underscore the importance of promoting sound internal governance as a driver of sectoral stability, while also addressing asset quality challenges through enhanced credit risk monitoring frameworks.