[01] Titus Wuyah Yunana, Department of Economic and Management Science, Nigeria Police Academy, Wudil-Kano, Nigeria. [02] Solomon Olubunmi, Department of Economic and Management Science, Nigeria Police Academy, Wudil-Kano, Nigeria. [03] Muhammad Dahir Ahmad, Department of Economic and Management Science, Nigeria Police Academy, Wudil-Kano, Nigeria.

The study analyzed the shocks in commercial banks performance to interest rate deregulation in Nigeria spanning the period 1986-2019’. The study used the Auto regressive Distributive lag Model (ARDL) estimated the equation after conducting stationarity test, co-integration, and normality test. The result of the unit root test reveals that SDR and TDR are non-stationary at level but becomes stationary after 1st difference while ROA and RTR are stationary at levels, implying that they are integrated of order zero. The findings also show that the calculated Chi-square value is 843.2 and is greater than all the Pesaran lower and upper bound limits at 1%, 5% and 10% respectively. Therefore, the negative hypothesis is rejected meaning that there is co-integration among the variables. Furthermore, the result shows that deregulated interest rate has a positive relationship on the commercial banks performance (asset) for the period of observation. Findings also reveal suggests that the estimated parameters for the study are stable for the period under study and are useful for policy decision. However, normality test failed with a low Jaque-Berra probability value less than 5%. Hence, the error residual of the data set is not normally distributed. The study therefore recommends that interest rate should be left in the invisible hands of Adam Smith (The forces of demand and supply of money) and not fixed by the Central Bank. Also, savings deposit rate should be high to encourage savings which improve positively the rate of returns on assets.

Interest Rate, Deregulation, Asset, ARDL, Commercial Bank

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