IIARD International Institute of Academic Research and Development

IIARD International Journal of Economics and Business Management (IJEBM )

E-ISSN 2489-0065
P-ISSN 2695-186X
VOL. 4 NO. 5 2018

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Effects of Total Debts to Total Assets on Return on Assets of Deposit Money Banks in Nigeria

Jummai V. Madume (Phd), Samuel Dibiah & Ebiware Adekitanke

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Abstract

The aim of this paper is to investigate the effects of Total Debts to Total Assets on Return on Assets of Deposit Money Banks in Nigeria using the pooled Ordinary Least Square (OLS) technique. We used a balanced panel data, consisting of seven deposit money banks for ten quarters giving us seventy observations from 2015:Q1 to 2017:Q2 from Securities and Exchange Commission. The results reveal a significant but negative relationship between Total Debts to Total Assets on Return on Assets of Deposit Money banks for the period under study implying that continuous accumulation of debts as option for financing banks will reduce average Returns on Assets drastically. The study therefore concludes that debts are not the best option for financing banks because of the high cost associated with them and recommends that deposit money banks should source for other means of financing their banks other than debts, like equity because of the high cost associated with them

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