Finance & Accounting Research Journal, Volume 6, Issue 2, February 2024

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OPEN ACCESS
Finance & Accounting Research Journal
P-ISSN: 2708-633X, E-ISSN: 2708-6348
Volume 6, Issue 2, P.No. 215-225, February 2024
DOI: 10.51594/farj.v6i2.814
Fair East Publishers
Journal Homepage: www.fepbl.com/index.php/farj

ANALYSIS OF INTEREST RATE SPREAD ON FINANCIAL

RESILIENCE OF QUOTED BANKS IN NIGERIA
Andrew E.O. Erhijakpor PhD, FCA1 & OFOGBA Onocha Karevu2
1&2
Department of Banking and Finance,
Faculty of Management Sciences,
Delta State University, Abraka, Nigeria
___________________________________________________________________________
*Corresponding Author: Andrew E.O. Erhijakpor,
Corresponding Author Email: erhijakporaeo@delsu.ng, / aeoerhijakpor@gmail.com

Article Received: 20-10-23 Accepted: 01-02-24 Published: 17-02-24

Licensing Details: Author retains the right of this article. The article is distributed under the terms of
the Creative Commons Attribution-Non Commercial 4.0 License
(http://www.creativecommons.org/licences/by-nc/4.0/) which permits non-commercial use,
reproduction and distribution of the work without further permission provided the original work is
attributed as specified on the Journal open access page.
__________________________________________________________________________
ABSTRACT
This paper examined the effect of interest rate spread (IRS) on financial resilience of quoted
Nigerian banks from 2007 to 2021. Specifically, the paper examined the effect of deposit rate,
lending rate, and interest rate differential on financial resilience of quoted Nigerian banks. The
paper collected data from the CBN bulletin (2021) and Security Exchange Commission (SEC)
annual report (2021) and the World Bank data base (2021). The study covered all the twenty
one (21) commercial banks quoted in the Nigerian exchange group as of 31st December, 2021
using the census sampling approach. The study reported that, deposit (savings) rate/cost has a
positive (coef=0.056833) insignificant (p-value=0.5327.5%) effect on financial resilience
(bank z-score) of quoted banks in Nigeria. By extension, deposit (savings) rate/cost has a
minimal effect on banks’ financial resilience. However, lending (borrowing) rate/cost interest
rate differential (prime lending/borrowing rate/cost less savings/deposit rate/cost) exerted
negative (coef= -0.527024&coef= -0.160001 respectively) significant (p-value=0.0001<5%
&p-value=0.0194<5%) effect on financial resilience (bank z-score) of quoted banks in
Nigeria.Hence, the paper concludes that, high lending rate and interest rate differential reduce
financial resilience of quoted Nigerian banks. As such, the study submits that, the apex banks
must ensure that, the rising lending rate should be discouraged. This if not cautioned; it has the
capacity to reduce the productive capacity of the private sector. Again, to encourage more

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 Finance & Accounting Research Journal, Volume 6, Issue 2, February 2024

depositors to invest their depositors’ funds, the ape banks should raise the deposit rate. Lastly,
the Nigerian banks are adjourning to keep their interest rate differentials relatively low.
Keywords: Analysis, Interest Rate Spread, Deposit Rate, Lending Rate, And Interest Rate
Differential, Financial Resilience Quoted Banks.
___________________________________________________________________________
INTRODUCTION
Banks and other non-bank financial institutions plays critical roles in every modern economy
since they help to intermediate funds from savers to borrowers for a cost otherwise called
financial intermediation cost. This suggests that, a stable, sound, and healthy banking industry
is sacrosanct to the growth and development of every economy (Kocenda & Iwasaki, 2021).
This further reiterates the need for the banking industry to be financially resilient. The term
financial resilience means that, the ability of banks to remain afloat despite when they are
confronted with operational challenges (Kocenda & Iwasaki, 2021). However, the challenge
here is that, both government pressure & the poor economic conditions in Nigeria have made
the apex bank of Nigeria (CBN) to adopt contractionary monetary policies. This has obviously
made banking activities a bit cumbersome. Consequently, concerns have been raised about
negative borrowing costs and how they might affect the already fragile banking industry, which
is currently experiencing low borrowing costs due to inflation that is low, unstable asset prices,
slow growth in the economy, & financial turmoil (Eferakeya & Erhijakpor, 2020). The idea is
to promote indebtedness so that it may be used to fund investment and consumption, which
starts a cycle of growth that is self-sustaining. The curve of yields has flattened as a
consequence of policymakers' increased reduction of rate of interest in response to the ongoing
economic crisis. This implies that banks, whom hold enormous amounts of government debt,
often see a further decrease in their earnings, endangering the viability of Nigerian institutions
(Mbachu, 2022).
Furthermore, since the financial meltdown of 2007, the issue of interest rate dynamics has
continued to remain an issue of intense contention and have recently garnered more attention
from both bankers and scholars. This is a result of the fundamentals of interest rates having an
impact on business success in addition to the economy (Anyanwu & Anyanwu, 2012). It is
interesting to note that among interest rate factors that affect a country's economic growth and
the financial performance of businesses is interest rate spread (IRS). Justifiably, a high interest
rate spread (IRS) (high lending rate and low deposit rate) should restrict borrowing and savings,
weaken investments, skew economic growth, and negatively impact the performance of
businesses. Notwithstanding these presumptions, research indicates a link between IRS and a
company's financial success that is both favorable and bad. According to several academics,
interest rate spread (lending and deposit rate difference) hinders banks' ability to function
(Ahonkhai, Osuji & Erhijakpor, 2023).
In 2007, the IRS was 13.39%, with the lending rate being 16.94% and the deposit rate being a
pitiful 3.55%. 2008 saw an IRR of 12.30% due to the lending rate being 15.14% and the deposit
rate being a pitiful 2.84% (CBN, 2019). As at 2019, IRS persisted reaching 11.28% (CBN,
2019). The lending rate was 15.21% while the deposit rate was 3.93%. However, the IRS
dropped to 9.10% by 2020 but both the lending & deposit rates remained at 12.32% and 3.22%
respectively (CBN, 2021). These rates has over time be occasioned by the series of interest rate
policies.

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In an attempt to liberalize the Nigerian interest rate by allowing the forces of supply and
demand to take its due course, the Structural Adjustment Program (SAP) was put into place in
1986. This made it possible for the market to set interest rates. The justification for permitting
players in the financial sector to bargain over interest rates on deposits and loans was to
promote an efficient intermediation process while also ensuring a healthy degree of
competition and participation (Ogundipe, Akintola, &Olaoye, 2020). Following the Central
Bank of Nigeria's identification of inflationary pressures, a contractionary lending policy was
established. The purpose of this program was to regulate the flow of money inside the economy
by limiting the volume of borrowings. Despites these initiatives, bank lending rates have
remained high, making lending quite expensive. This in turn has caused businesses in Nigeria
to dissolve, which has resulted in a decrease in output & high unemployment rates (Akinwale,
2018). Again, the reality that most Nigerian banks operate as middlemen in the collection and
distribution of financial resources is indicative of the commitments Nigerian banks make. The
challenge however is that of high interest rate disparity. This is especially valid in terms of
financial gain. Consequently, the interest rate is acknowledged as a critical component that
supports the survival and going concern. Therefore, changes in rates of interest have the
possibility to negatively impact both the general well-being of banks and the national economy,
as seen by the volatile rate of interest policy in Nigeria (Osho &Akinola, 2018).
Given these contradictory results, one may ask if interest rate spread has a major impact on
DMBs’ financial resilience. This study filled this vacuum by analyzing the impact of interest
rate spread has a major impact on DMBs’ financial resilience using single-equation models
that included bank z-score into the model. Arising from the above contradictory findings, a
missing link was created in extant empirical documentations which the current study desired
to fill. Hence, the main aim of this research paper is to evaluate the effect of interest rate
differentials/spread on financial resilience of the Nigerian banking industry cum commercial
banks in Nigeria from 2007 to 2021. The interest rate differentials/spread considered are:
lending rate, deposit rates, and differences between lending and deposit rates while financial
resilience was measured by bank z-score. It is on this basis that, three specific objectives were
formulated. The formulated specific objectives reads thus:
1. To evaluate the extent lending rates affect the financial resilience of commercial banks
in Nigeria
2. To ascertain the extent deposit rates affect the financial resilience of commercial banks
in Nigeria
3. To evaluate the extent interest rate differentials affects the financial resilience of
commercial banks in Nigeria
To address the above formulated specific objectives, three research questions were raised:
1. To what extent has lending rates affected the financial resilience of commercial banks
in Nigeria?
2. To what degreehas deposit rates affected the financial resilience of commercial banks
in Nigeria?
3. To what magnitude has interest rate differentials affected the financial resilience of
commercial banks in Nigeria?
Consequently, the paper postulated three null hypotheses which read thus:

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 Finance & Accounting Research Journal, Volume 6, Issue 2, February 2024

H01: Lending rates do notaffect financial resilience of commercial banks in Nigeria

significantly
H02: Deposit rates do notaffect financial resilience of commercial banks in Nigeria
significantly
H03: Interest rate differentials do notaffect financial resilience of commercial banks in
Nigeria significantly
Summarily, the paper is structured into five specific sections. The first section dealt with the
introduction; the second section covered the literature review; the third section covered the
methodology; the fourth section covered the results and discussion while the last section dealt
with the conclusion and recommendations.
LITERATURE REVIEW
This section delved into the empirical documentations of prior empiricists with a view to
establish the missing link in extant empirical studies. Justifiably, this section covered three
main subsections which are: conceptual, theoretical and empirical review. They are discussed
extensively thus:
Conceptual Review
The two main rates which determine the going concern of the banking industry are: lending
rates and deposit rates. Specifically, the lending rates otherwise called the borrowing costs. It
therefore accounts for the cost banks incur for borrowing loans to their most esteemed
customers. These are cost which the bank incurs for lending out their credit facilities to the
borrower. These costs are used to meet the liquidity needs of the customer (Anyanwu &
Erhijakpor, 2005). According to Ogundipe, Akintola and Olaoye (2020), to ensure that, all
Nigerian banks charge a uniform rate, all the Nigerian banks formed a network with which the
apex can communicates communicate the prevailing rate to them. Dhungana (2016) added that,
the lending rate could either be normal or real. The major difference between the two lies in
the inclusion or exclusion of inflation rate; wherein inflation rate is captured, it is considered
real lending rate but if it was not considered, it is termed nominal lending rate (Anyanwu &
Anyanwu, 2009). The reason for accounting for inflation rate is because high inflation rate has
a huge depressing effect on the purchasing/buying power of the currency (Anyanwu &
Anyanwu, 2009).
Worthy to note is that, the two major terminologies in lending rate is that of maximum and
minimum lending rate. While the maximum lending rate is the highest rate banks are legally
expected to charge borrowers, the minimum lending rate is the least rate banks are legally
expected to charge borrowers (Eferakeya, Enakirerhi & Erhijakpor, 2022). Justifiably, if the
lending rate is too high, banks would become highly susceptible to high financial turmoil.
Further, individuals, companies, & sectors would be discouraged from taking credit facilities
which in turn would reduce the pace of development of the economy (Osuji, Erhijakpor, &
Oshiobugie, 2022).
In addition to charging interest on the credit facilities which banks grant to borrowers, banks
also pay interest to their customers on the deposits they have placed with them. This is termed
the deposit rate. Simply put, a deposit rate is the rate the bank agrees to pay an individual that
deposits his/her funds in the bank either on annual or monthly basis without necessarily within
such money. However, the differences between these two rates, is known as the interest spread.
This interest rate differences are largely responsible for the profits which banks make. As such,

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 Finance & Accounting Research Journal, Volume 6, Issue 2, February 2024

if the intermediation cost is high, borrowers may not be able to repay his/her outstanding loans
(Erhijakpor, 2021). Again, a financially resilient banking industry is one that is financially
stable despite change in the macro-economy. Although, there are various parameters to
measure financial resilience, the paper considers bank z-score. This parameter reveals that, a
higher banks’ z-score reveals the possibility of bank run is high while a low bank z-score
reveals that the possibility of bank run is high (Kulu & Osei, 2023).
Theoretical Review
The real bill concept, or loanable fund theory, is the foundation of the paper. The idea
emphasizes that the availability and demand of money dictate lending rates, meaning that an
increase in the demand for money would result in higher borrowing costs. But if there is a
decline in the demand for money, borrowing will become less expensive. The argument goes
on to emphasize the part banks play in extending credit. It is believed that the banking industry
can generate credit because it can momentarily lower market interest rates below natural rates,
which will reduce the IRS, improves investments, and increase financial resilience of the
Nigerian banks. It was countered that banks may potentially eliminate credit, in which case
market interest rates would rise above natural rates.
Empirical Review
Ariwa (2023) researched on the performance of Nigerian deposit money banks (DMBs) and
interest rate spread (IRS) from 2007 to 2020. The impact of the IRS was specifically assessed
on three DMB performance metrics: profit after tax (PAT), return on equity (ROE), and return
on assets (ROA). The test statistic was a panel data (fixed effect) regression approach. Results
indicated that whereas IRS had no discernible impact on DMB ROA in Nigeria, it had a major
impact on PAT and ROE.
Oluwayemisi and Fajuyagbe (2022) examined the effects of interest rates (domestic money
supply growth, lending rate and inflation rate)on the financial performance (ROA) of listed
banks in Nigeria. The paper adopted the ex-post facto analyses. Meanwhile, the panel data was
used to test the research hypotheses. The study reported that, interest rates (domestic money
supply growth and lending rate) have positive significant effect on the financial performance
(ROA) of listed banks in Nigeria. However, inflation rate has a negative significant effect on
the financial performance (ROA) of listed banks in Nigeria.
Musah, Anokye and Gakpetor (2018) investigated the impact of interest rate high spread on
profitability of Ghanaian banks from 2003 to down 2016. They evidenced that,interest rate high
spread increase net interest margin, size, ROA, ROE& capital adequacy ratio significantly.
Similarly, Nabende (2018) conducted a research on the IRS factors in Uganda's commercial
banking industry between 2005 and 2015. It employed dynamic panel data analysis and
Generalized Methods of Moment to analyze data.The study discovered that risk of credit, risk
of liquidity, operating costs, noninterest income, capital adequacy ratio, foreign bank
participation, and inflation rate are beneficial and important determinants of IRS in Ugandan
commercial banks. The study also demonstrated that, bank size, real GDP per capita, exchange
rate, and M2/GDP ratio are negatively associated with IRS.
Additionally, from 1992 to 2015, Owusu-Antwi, Bamerjee and Antwi (2017) investigated IRS
and bank profitability in Ghana. The study revealed that while the inflation rate had a negative
and significant impact on IRS, overall assets had a positive but negligible influence. Ultimately,
the analysis demonstrated that Ghana's IRS was negatively and negligibly impacted by the

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GDP growth rate. The study's conclusions demonstrated that, in contrast to net interest income
and operational costs, ROA had a positive and considerable impact on IRS.
Eyigege and Nguavese (2019)examined the interest rates on financial performance (ROA and
liquidity=CA/CL) of Nigerian banks over 12-year period (2004–2015). The study employs a
descriptive research design with cross-sectional panel data using Yemane's sampling
technique. The populace is made up of deposit money holders. The study reported that, high
lending ate reduce the financial performance of quoted Nigerian banks.
METHODOLOGY
This paper examined the effect of interest rate spread (IRS) on financial resilience of quoted
Nigerian banks from 2007 to 2021. The paper collected data from the CBN bulletin (2022),
Security Exchange Commission (SEC) annual report (2022) and the World Bank data base
(2021). The essence of sourcing data from the above secondary sources is because reports from
these sources are highly reliable. The research design considered here is the Expost facto
research design since the study variables (lending, deposit rates, and z-score) are existing data
and cannot be manipulated.
The study covered all the twenty one (21) commercial banks quoted in the Nigerian exchange
group as of 31st December, 2021 using the census sampling approach. The essence of using
this approach is that, this research approach ensures that, all the items in a population are
enumerated. This is because all the 21 commercial banks have complete data and that the data
the study desire a pool of all the data. The functional form of the model is expressed as:
FINR = f (LER, DER, INTD) ----------------------------------------- (1)
The econometric model is stated as:
FINR = β0 + β1LER+ β2DER+ β3INTD + µ0 ------------------ (2)
Where:
β0 = intercept
β1- β3= coefficient of parameters
FINR = Financial Resilience
LER = Lending Rate
DER = Deposit Rate
INTD = Interest Rate Differential
µ = error term
Table 1
Variable Measurements
Variables Description Type of variable Apriori
expectation
FINR Financial Resilience Bank Z-score Dependent Nil
LER Lending Rate Prime Lending Rate Independent Positive
LDE Deposit Rate Volumes of Deposit Independent Negative
Rate
INTD Interest Rate Differential Prime Lending Rate- Independent Positive
Deposit Rate
Source: Researcher’s Compilation (2023)

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RESULT ESTIMATIONS AND DISCUSSION

Preliminary Estimates
Prior to regressing the work, the variables were first subjected to trend analysis and then
descriptive statistics and correlation analysis. Each of the trend analysis are presented herein:
60.00
Lending Rate-LER
Deposit Rate-DER
50.00
Interest Rate Differrential-INTD
40.00

30.00

20.00

10.00

0.00

2009

2014
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008

2010
2011
2012
2013

2015
2016
2017
2018
2019
2020
2021
Figure 1: Trend Analysis from Interest Rate Spread from 1996 to 2021.
Source: Researcher’s Compilation (2023)
Figure 1 clearly presented the three (3) interest rate spread proxies which are: deposit rates
denoted by DER, Lending rate denoted by LER, and interest rate differential denoted by INTD.
All indication clearly revealed that, the cost of borrowing (lending rate) is far higher than the
depositors’ fund (deposit rate). This is evidenced by the huge disparity rate between the cost
of borrowing (lending rate) is far higher than the depositors’ fund (deposit rate). This further
re-validates the possibility of financial repression. Justifiably, as the lending rate at each
instance was far above the prime savings (deposit rate. This suggests wide variation between
the prime lending rates and the saving (deposit) rate. The implication of this to this paper is
that, the possibility of bank failure is high should this continue. This is because; high lending
(borrowing) rate reduces the ability of the banking industry to fail.

Financial Resilence
7.80
7.60
7.40
7.20
7.00
6.80
6.60
6.40
6.20
6.00
5.80
2007

2015
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006

2008
2009
2010
2011
2012
2013
2014

2016
2017
2018
2019
2020
2021

Figure 2: Trend Analysis from Financial Resilience from 1996 to 2021.

Source: Researcher’s Compilation (2023)

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Figure 2 give a clear trend analysis of the financial resilience proxy of all the quoted Nigerian
banks as obtained from the World Bank Data Base. The study clearly reveled that, the value of
bank z-score fluctuated throughout the studied periods. This is an indication that, the Nigerian
banking industry faced a lot of challenges during the periods of investigation yet remain
financially stable throughout the reviewed periods.
Table 2
Descriptive Statistics
DER LER INTD FINR
Mean 3.91 17.46 13.54 7.25
Maximum 1.41 11.55 9.10 6.80
Minimum 1.17 2.69 2.45 0.24
Standard Deviation 1.15 2.58 2.22 0.19
Observations 26 26 26 26
Source: E-Views 9.0 (2023)
The study reported a study observation of 26 years (1996 to 2021) for all study variables. This
suggests that, none of the values were missing. The highest (maximum) lending (borrowing)
rate/cost was 11.55% while the lowest lending (borrowing) rate/cost was2.69% but deviated
by 2.58%. On the average, it was 17.4%. By implication, the highest (maximum) lending
(borrowing) rate/costof1.41% was far above the lowest lending (borrowing) rate/cost of 2.58%.
However, highest (maximum) deposit (savings) rate/cost was 1.41% while the lowest lending
(borrowing) rate/cost was1.17% but deviated by 2.58%. On the average, it was 3.91%. By
implication, the highest (maximum) deposit (savings) rate/costof1.41% was slightly above the
lowest deposit (savings) rate/cost of 1.17%.Meanwhile, the average interest rate differential
(prime lending/borrowing rate/cost less savings/deposit rate/cost) was 13.54% but deviated by
2.22% while the highest and least interest rate differential (prime lending/borrowing rate/cost
less savings/deposit rate/cost) was 9.10% and 2.45% respectively. Lastly, average financial
resilience (bank z-score) was 7.25% but deviated by 0.19%. This is a clear indication that
financial resilience (bank z-score) was relatively high. Again, highest (maximum) financial
resilience (bank z-score) value was 6.80% while the lowest financial resilience (bank z-score)
value was0.24%.
Table 3
Correlation Analysis
Variables FINR DER LER INTD
FINR 1.000000
DER 0.380396 1.000000
LER -0.509550 0.080385 1.000000
INTD -0.350098 0.084211 0.084591 1.000000
Source: E-Views 9.0 (2023)
Table 3 presents the correlation coefficients (r) for each variable. Table 3 reported that, deposit
(savings) rate/cost is positively (r=0.380396) related with financial resilience (bank z-score) of
quoted banks in Nigeria. Similarly, the relationship between deposit (savings) rate/cost and
financial resilience (bank z-score) is moderate. However, lending (borrowing) rate/costinterest
rate differential (prime lending/borrowing rate/cost less savings/deposit rate/cost) are
negatively (r=-0.509550& r=-0.350098) related with financial resilience (bank z-score) of
quoted banks in Nigeria.
In terms of the correlation among the regressors, none of the regressors reported high
correlation since they fall below 80%. This suggests that, the variables did not exhibit multi-

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 Finance & Accounting Research Journal, Volume 6, Issue 2, February 2024

correlation issues. This is a sign of the absence of multi-co linearity, which is frequently found
in time series data.
Regression Estimate
Based on the preliminary estimate presented above, the main regression is presented in table 4:
Table 4
Regression Estimates
Dependent Variable: FINR
Included observations: 26 Method: Pooled OLS
Variable Coefficient Std. Error t-Statistic Prob.
C 1.452082 0.104294 13.922950 0.0000
DER 0.056833 0.091066 0.624088 0.5327
LER -0.527024 0.137772 -3.825324 0.0001
INTD -0.160001 0.068284 -2.343179 0.0194
R-squared 0.739846 Mean dependent var. 7.25422
Adjusted R-squared 0.738281 Durbin-Watson stat 2.176393
F-statistic 2.189631 Prob(F-statistic) 0.041992
Heteroskedasticity Test: Breusch-Pagan-Godfrey
F-statistic 0.660595 Prob. F(3,22) 0.5764
Ramsey RESET Test
F-statistic 0.463013 Prob.Value 0.6808
Mean VIF 1.07560 Normality Test (prob. value) 0.3055
Source: E-Views 9.0 (2023)
From regression estimate in table 4, the Heteroskedasticity Test reported a Prob. F(3,22) value
of 0.5764 which suggests that, the series are Homoskedasticity (constant variance). Meanwhile,
the Ramsey RESET Test reported a prob. value of 0.6808 which suggests that, the series are
well-specified. More so, the mean VIF value of 1.07560 and the prob. value of the normality
test of 0.3055 suggest that, series are normally distributed. This further implies that, the model
is fit for prediction. To further sustain this claim, the R-squared value of 0.739846 and adjusted
R-squared value of 0.739846 and 0.738281respectively suggests that, the model has a high
explanatory power/predictive power.
Furthermore, the regression estimate reported that,deposit (savings) rate/cost has a positive
(coef=0.056833) insignificant (p-value=0.5327.5%) effect on financial resilience (bank z-
score) of quoted banks in Nigeria. By implication, rise in deposit (savings) rate/cost will only
increases the chances of banks’ financial resilience by a minimum value of 5.68%. By
extension, deposit (savings) rate/cost has a minimal effect on banks’ financial resilience.
However, lending (borrowing) rate/cost interest rate differential (prime lending/borrowing
rate/cost less savings/deposit rate/cost) exerted negative (coef= -0.527024&coef= -0.160001
respectively) significant (p-value=0.0001<5% &p-value=0.0194<5%)effect on financial
resilience (bank z-score) of quoted banks in Nigeria.By implication, rise in lending (borrowing)
rate/cost interest rate differential (prime lending/borrowing rate/cost less savings/deposit
rate/cost) will only reduce the chances of banks’ financial resilience by a significant value of
52.70% and 16% respectively. By extension, lending (borrowing) rate/cost interest rate
differential (prime lending/borrowing rate/cost less savings/deposit rate/cost) is a major factor
which increases the possibility of Nigerian banks to bank run. Justifiably, the rising lending
(borrowing) rate/cost interest rate differential (prime lending/borrowing rate/cost less
savings/deposit rate/cost) has a high deterring effect on the financial stability of the Nigerian

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 Finance & Accounting Research Journal, Volume 6, Issue 2, February 2024

banking industry. This further suggests that, changes in affected the financial resilience of
quoted Nigerian banks.
This is in tandem with empirical findings of Eyigege and Nguavese (2019)but deviated from
Ariwa (2023); Musah, Anokye and Gakpetor (2018); Nabende (2018); &Owusu-Antwi,
BamerjeeandAntwi (2017).
CONCLUDING REMARKS AND POLICY RECOMMENDATIONS
According to the findings of the research, the liberalization of interest rates in Nigeria had a
beneficial impact on the financial resilience of quoted Nigerian banks within the reviewed
periods. The study further affirmed that, high deposit rates improves financial resilience of
quoted Nigerian banks within the reviewed periods while high lending rate make banks to be
susceptible financial depression. Hence, the paper concludes that, high lending rate and interest
rate differential reduce financial resilience of quoted Nigerian banks. As such, the study
submits that, the apex banks must ensure that, the rising lending rate should be discouraged.
This if not cautioned; it has the capacity to reduce the productive capacity of the private sector.
Again, to encourage more depositors to invest their depositors’ funds, the ape banks should
raise the deposit rate. Lastly, the Nigerian banks are adjourning to keep their interest rate
differentials relatively low.
Limitations and Suggestions for Future Studies
The paper only considered three (3) regressors (deposit rate, lending rate, and interest rate
differentials) against one regressed (bank z-score). Hence, the paper is limited to these proxies.
Consequently, future researches should incorporate monetary policy rates, inflation rate and
money supply into the model. Lastly, the paper only focused on the Nigerian banking industry.
Hence, the paper suggests that future researches should focus on other sectors such as
manufacturing, insurance, oil and gas and health care sectors.

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