Unlocking Bank Performance: How Institutional Quality Shapes the Impact of Financial Inclusion in Nigerian Deposit Money Banks

This study examined the moderating effect of Institutional quality (henceforth IQ) on relationships between financial inclusion (henceforth FINC) and financial performance(henceforth Perf) among deposit money banks in Nigeria. The study used 13 deposit money banks that are listed on the stock exchange. The panel ARDL approach was used to establish the short- and long-run moderating effect of IQ on the relationships between FINC and PERF among deposit money banks in Nigeria. Looking at the long- and short-run dimensions of the moderating effect of IQ on the relationship between FINC and the PERF, the study found mixed results. The study found that IQ variables significantly moderate the relationship between FINC variables and the PERF of deposit money banks in Nigeria in both the long and short run. These suggest that the moderating effects of IQ are more pronounced in the long run than in the short run. The study found that IQ has a more pronounced moderating impact on the commercial bank branches than other measures of FINC used. Lastly, the study established that the rule of law and corruption perception have the most pronounced moderating effects on the relationship between FINC and PERF among deposit money banks in Nigeria.