CAPITAL STRUCTURE AND FINANCIAL PERFORMANCE OF MONEY DEPOSIT BANKS IN NIGERIA

Authors: Dr. Olagunju, A., Olaiya, A. C* & Dr. Alaketu, A. A.

ABSTRACT

The study’s main objective was to investigate how capital structure affected deposit banks in Nigeria’s financial performance. The study specifically looked at the effects of the ratio of total capital to total assets on the asset return of chosen DMBs in Nigeria, as well as the effects of the ratio of total debt to total assets and the ratio of total debt to total debt. For the ex post facto study project, five (5) money depository institutions were selected as a population sample of all money depository banks in Nigeria. The independent variable was represented by TETA, TDTE, and TDTA, while the dependent variable was represented by return on assets (ROA) and current ratio. The data sources were the overall annual income and financial standing of the selected institutions, and panel fixed effects regression was utilized as the main estimation method. The findings demonstrated that the capital structure had very little positive influence on investment returns from assets. Debt-to-equity ratio, however, has little effect on Nigerian depository banks’ return on assets. The study came to the conclusion that the assets’ profitability is not significantly positively impacted by the capital structure (TDTE, TETA, and TDTA). As a result, the report advised depository banks to take on more debt in order to boost their return on assets and earnings per share.

Keywords: Capital, Performance, Equity, Debt, Assets

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