FIXED INCOME SECURITIES AND FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study investigated the effect of the use of fixed income securities on financial performance of Deposit Money Banks in Nigeria. Fixed income securities which were the independent variables were measured as government bond, corporate bond, treasury bill and commercial paper while financial performance which is the dependent variable was measured as total asset of deposit money banks in Nigeria. Employing the Ordinary Least Square (OLS) regression estimation technique as embedded in view 8.0 econometric software to analyze the time series data which are secondary in nature as obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin with the period ranging from 1991 to 2021, the study found the following: Government bond does have positive and significant effect on the financial performance of deposit money banks in Nigeria. There is positive but not significant relationship between corporate bond and the financial performance of deposit money banks in Nigeria. Treasury bill does positively and significantly affect the financial performance of deposit money banks in Nigeria. There is positive and significant effect of commercial paper on the performance of deposit money banks in Nigeria. Flowing from the foregoing findings, the study concluded that fixed income securities have significant effects on the financial performance of deposit money banks in Nigeria and therefore recommends that the Federal and the sub national governments of Nigeria should cultivate the habit of floating bonds in the domestic market in their borrowing decisions. This would not only encourage the development of the Nigerian Capital market but would encourage deposit money banks and other entities to patronage the market for their portfolio investment decisions.