This paper investigates the influence of the inflation rate (IFR) on the association between the earnings retention ratio (ERR) and share price (SP) of Deposit Money Banks (DMBs) in Nigeria from 2012 to 2021. IFR, ERR, and firm size (FSZ) are the explanatory variables and the dependent variable is SP. Data were obtained from the financial reports of the sampled banks. The census sampling was used, where the entire 14 listed DMBs were used as the population and the sample size at the same time. The results from the analysis showed a positive and substantial relationship between SP and ERR. The findings further revealed a positive but insignificant connection between SP and IFR. Moreover, the results established a negative and immaterial relationship between SP and moderated ERR with IFR and FSZ as a control variable. Therefore, it is assumed and recommended that DMBs can improve the value of SP through financial engineering on their dividend policies.
Keywords: earnings retention ratio, firm size, inflation, share price