Efficiency and Banks Performance: Evidence from Nigeria

Abstract

This examines the relationship between efficiency and banks performance in Nigeria for the period 1989 -2013.The study employed some econometric tools to analyze the variables and the unit root test results indicate that all the variables were integrated at order 1(1).The result of the coefficient shows that Return on Assets (ROA) were statistically significant and had a positive influence on efficiency in banks while Non-Performing Loans (NPLs) have a negative but statistically significant influence on efficiency in banks.The policy implication of these results is that, it lends a very strong evidence that rising or high non-performing loans tends to undermines banks performance in the banking industry thereby creating inefficiency among banks in Nigeria. Thus, the study offer some recommendations amongst others that banks should more efficient in the allocation of resources so as to contribute meaningfully to the growth and development of this country, Nigeria.