EFFECTS OF CAPITAL STRUCTURE ON THE FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study investigates the effect of capital structure on financial performance of deposit money banks in Nigeria for a period of ten (10) years from 2010-2019. The specific objectives of the study was to examine effect of Equity/asset ratio on Return of Investment of deposit money banks (DMBs) in Nigeria. The study adopted ex-post facto research design and the population of the study consist of 15 DMBs out of which a sample of eight (8) were selected using purposive sampling technique. Secondary source of data from the annual reports of the selected banks and analyzed using panel least squares regression with the aid of E-views 10 to analyze the formulated hypotheses. From the data analysis, the study result showed that total equity to asset ratio have a significant positive effect on the financial performance of the selected listed banks. The study concludes that capital structure variable of Equity/asset ratio (E/AR) ratio are good financial performance measure of deposit money banks in Nigeria. The study therefore recommends that capital structure of a firm should be adequately planned to safeguard the interest of the equity holders, shareholders and financial requirements of the firm. Finally, Political changes are very important factor in the share market. It also determines the firm performance. Therefore, stable economic and political atmosphere should be possible to increase the financial performance of the listed companies