An Analysis on the Impact of Firm Size on Profitability of Listed Deposit Money Banks in Nigeria

Abstract

This paper examines the impact of firm size on the profitability of listed Deposit Money Banks (DMBs) in Nigeria, carried out based on the historical panel data analysis. To achieve this objective; an ex-post factor research design was employed. Data were generated from the annual reports and accounts of the sampled quoted Deposit Money Banks (DMBs) from 2005 – 2014. Fixed-effect and random-effect Generalized Least Square (GLS) regression technique was used as tool of data analysis. The findings establish that the independent variable (firm size) has insignificant positive effect on the DMBs’ profitability proxies represented by ROA and ROE. It was concluded that Firm Size does not have significant impact on the profitability of the listed DMBs in Nigeria. The paper recommends that DMBs should maintain optimum firm size through effective management of service operations which is crucial for controlling labor cost by using the smallest possible amount of inputs which include labor and other operating cost to bring out maximum result toward improving the corporate profitability significantly.