Open AccessCapital Structure and Financial Performance of Quoted Deposit Money Banks (DMBs) in Nigeria
Author(s) -
Sani Abdul Rahaman Bala,
Mohammed Auwal Babangida
Publication year - 2022
Publication title -
asian journal of economics, business and accounting
Language(s) - English
Resource type - Journals
ISSN - 2456-639X
DOI - 10.9734/ajeba/2022/v22i530557
Subject(s) - net interest margin , debt ratio , debt , capital adequacy ratio , capital structure , financial system , nonprobability sampling , business , panel data , margin (machine learning) , debt to capital ratio , finance , economics , monetary economics , econometrics , return on assets , profitability index , medicine , return on equity , computer science , profit (economics) , population , environmental health , equity ratio , machine learning , microeconomics
This study examined the influence of capital structure on the financial performance of DMBs in Nigeria. The study sampled 6 (six) out of 24 quoted DMBs in Nigeria as of December 2020, which was arrived at using the Stratified and purposive sampling technique. Financial performance (DV) was proxied by Net Interest Margin. Capital Structure (IV) was proxied by Short Term Debt Ratio and Long-Term Debt Ratio. A panel regression model was employed for data analysis. The analyses exert that, at 5% level of significance, P-values indicates that short-term debt (STDTA = 0.94), TDTA (0.31) have considerable impact on ROA. While long-term debt (LTDTA) has a moderate impact on ROA at 9%. The study recommends that to improve financial performance, banks management should evaluate a tradeoff between SHTD and LGTD when deciding on capital structure.