CAPITAL STRUCTURE AND COMMERCIAL BANKS PERFORMANCE IN NIGERIA

Godfrey Chinweobi Ezenwakwelu

Abstract


This study was aimed at ascertaining the effect of capital structure on commercial banks performance in Nigeria for the period 2012 to 2016. Ex post facto research design was used to address the problem of this study.  The population comprised of 22 commercial banks out of which five banks were sampled using purposive /judgmental sampling technique. Secondary data sourced from various Audited Accounts and Reports of selected Commercial Banks and CBN Statistical Bulletins and Annual Reports were used. The core problem has been the inconsistency and sharp fluctuations in the commercial banks performance in Nigeria. Panel EGLS (Period random effects) method was used in estimating the models using EViews application software for windows. The main findings were that capital structure has no significant effect on return on equity, return on assets and earnings per share of commercial banks in Nigeria. However, commercial bank size had a significant effect on earnings per share. The conclusion was that the capital structure of commercial banks in Nigeria has no effect on their performance. The recommendations were that: the management of commercial banks should adopt the right strategy to attract adequate long term funds; the Government should improve the depth and liquidity of capital market to enable it meet the demand for long term funds; the financial system, economic system and commercial banks should maintain adequate credit/liquidity rating to attract investors and improve on their performances; the management of commercial banks should ensure that there is a right mix of debt and equity at all times through regular review of their financing mix.


Keywords


Capital Structure, Commercial Banks Performance, Annual Report,, Period Random Effects and Nigeria

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