Momodu Ayodele A, Ogunbiyi, Samuel S., Monogbe Tunde G, Nigeria
The role of the financial institution in intermediating between the surplus economic unit and deficit economic unit in ensuring productivity and soaring investment capability cannot be underestimated. Hence, this study seek to analysis how bank characteristics and overall banking environment affect bank function as reflected in interest margins and bank profitability between the periods 2008 to 2016 (9years) Using bank level data in Nigeria. This study employed pooled and panel data sourced and computed from the commercial banks annual reports. The study employed panel regression, panel co-integration, stationarity test, fixed effect estimate, random effect estimate and husman test to ascertain the appropriate model. Report showed that random estimate is the most appropriate model. From the report of the estimation, Equity/ Lagged Total Assets E/TA t-1, Loans/Total Assets and Customer and Short Term Total Funding/Total Assets seems to exhibit a positive and significant association to bank efficiency and profitability in Nigeria while among the macroeconomic indicators, only the gross domestic product exhibited a positive relationship to bank profitability with causality flowing from the economy to bank efficiency. This therefore suggests that economic advancement is a prerequisite for bank efficiency and profitability and that the choice of bank capital structure also determines her profitability and efficiency strength.