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. 2 NO. 7 2016

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Impact of Capital Structure on the Performance of Deposit Money Banks (A Study of Selected Deposit Money Banks in Nigeria)

Ihenetu Hyginus Iheanyi, Iwo Sotonye and Ebiware Adekitanke Ejiodamen

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Abstract

The research work was designed to evaluate the impact of capital structure on the performance of banks in Nigeria. The focus of the research is to identify the relationship that exist between highly geared capital structure and lowly geared capital structure on performance indices such as return on equity and return on assets. Four (4) banks were used and their audited financial statements analyzed to generate both the dependent and independent variables for twelve years (2002-2013). The statistical tool applied is ordinary least square and the result shows that highly geared capital structure is increases performance of deposit money than lowly geared capital. The recommendations made are that banks should employ more of debt capital in order to maximize return on investment, even when external debt is to be used, the banks should search for low interest bearing loans so that the benefit from the loan will exceed the financial cost associated with it etc.

keywords:

capital structure, performance, bank.

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