Effect of Total Quality Management and Innovation on Bank Performance: The moderating Role of Capital Strength among the listed commercial banks in Nigeria

Abstract

The objective of this paper was to ascertain the moderating effect of capital strength on the relationship between total quality management practices and innovation on bank performance. Besides, the paper sought to examine the complementary effect of innovation and total quality management practices on the performance of commercial banks in Nigeria. The population involves the entire listed commercial banks in Nigeria. There were 13 listed commercial banks as at 31st December 2016. The data analysis technique used for this paper is Ordinary Least Square Regression. The result revealed that innovation has a significant and positive effect on bank performance. However, total quality management was found to have an insignificant effect but a positive relationship with performance. Also, the capital strength of banks was found to have a positive and significant moderating effect on the relationship between innovation and performance. The study concluded that innovation is an essential factor that can lead to better performance of commercial banks in Nigeria. Specifically, investment in banks' intangible assets, particularly software development and goodwill, could enhance banks' profitability through net interest margin.