The study aims to examine the determinants of profitability of commercial and microfinance banks in Nigeria, in order to be able to highlight the possible effect of Central Bank of Nigeria policy actions in influencing the internal factors and subsequently the profitability of the banks in Nigeria. The study adopted the panel data research design. Out of the total number of 22 commercial banks and 898 microfinance banks, the study sampled 4 commercial banks and 4 microfinance banks using random sampling technique, and based on the availability of data. Data was sourced from the annual balance sheets and income statement of banks from 2010 to 2018 and analysed using the Random Effect Panel Estimation Technique. Findings from the study show that liquidity ratio is not a strong determinant of banks profitability whether commercial or microfinance banks while capital adequacy is a significant determinant of the profit level in both - banks with positive effect for microfinance and negative effect for commercial banks. The study also found that the real GDP is a significant determinant of only commercial banks profitability.

Ige Olaoluwa and Adewumi Otonne are both research associates in the Department of Economics, University of Ibadan, Oyo State, Nigeria. They both obtained their Bsc (Economics) from the University of Lagos and Msc (Economics) from the University of Ibadan, Nigeria.