Al-Hikmah University Journal

In Sub-Saharan Africa (SSA), financial intercessor is low and unmatched with other developed and emerging economies with high level of financial intermediaries. It is shown that there is high interest spread in Nigeria in spite of financial liberalization. The study investigated the determinants of interest rate spread. A panel regression analysis was employed to determine the effects of bank-specific, industry-specific, macro-economic and governance risk factors on interest rate spread involving 13 selected deposit money banks in Nigeria from 2009 to 2018. The Generalized Method of Moment (GMM) approach was employed. The study established that interest rate spread is determined by bank specific and macroeconomic factors mainly for risk aversion, interest risk and operating cost, monetary policy rate and inflation. The study recommends adoption of internal resolution discipline approach by the CBN and Federal Government in curtailing excessive risk taking of systematically important banks (highly capitalized banks) that translate into high interest spread.