Dashboard
Select Another Volume/Edition
The main objective of the study is to investigate the effect of exchange rate on the performance of commercial banks in Nigeria. The variables of nominal effective exchange rate, real effective exchange rate, inters rate and exchange rate fluctuation were regressed on return on asset over the period 1987 to 2019. Econometric techniques, including Augmented Dicker Fuller and Philip Perron tests for unit roots and ordinary least square (OLS) were used. The result of the unit root indicates that all the variables (ROA, NER, RER, INTR and ERF) attained stationarity at 1st difference. Again, the cointegration result suggests the existence of a long run relationship among the variables at 5% level of significance. The result of regression indicate that nominal effective exchange and real effective exchange rate, had positive and significant effect on return on asset while interest rate and exchange rate fluctuation had negative and insignificant effect on return on asset within the period under study. The study therefore concludes that exchange rate has adverse effect on the performance of commercial banks in Nigeria and has not helped to improve the rate of investment in Nigeria within the period under study. The study recommends that Banks should increase their deposit interest rates in order to mobilize deposits from the surplus unit of the economy. Since savings is the main source of funds to commercial banks, banks should give due emphasis to its savings mobilization and strive to increase their savings by providing excellent services for their customers