The paper investigated relationship between interest
rate and return on assets of selected deposit money banks in
Nigeria from 2008 to 2017. Data considered for the study were
obtained from secondary source while ten (10) deposit money
banks were selected for the study.
Data gathered were analyzed using regression estimate while
panel data analysis was utilized to examine magnitude and
significance of the relationship and the research variables. Panel
unit root test and Pedroni residual co-integration test were also
applied in the study.
The study concluded that prime lending rate, ratio of loan to
deposit and treasury bill do not significantly affect return on
assets, while savings deposit rate and maximum lending rate
exert positive and significant effect on return on assets of deposit
money banks in Nigeria.
The study recommends that policy making authorities in Nigeria
should coordinate interest rate fluctuations better and induce
competition in the entire financial sector.