IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 10 NO. 5 2024
DOI: https://doi.org/10.56201/jafm.v10.no5.2024.pg110.121

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Accounting Predictors of Firms’ Growth in Nigeria: The Banking Industry Experience

Essien Akpanuko, Ofonime O. Jeremiah, Eteyen Ikpong

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Abstract

The dynamics of commercial banks' growth in Nigeria has been an issue that has attracted research interest over the years. This study examined the accounting predictors of firms’ growth in Nigeria drawing evidence from the banking industry. A sample of 11 commercial banks listed on the Nigeria Exchange Group was selected for the study. The ex post facto research design was adopted for this study. Secondary data were extracted from the financial statements of the sampled banks for the period of 11 years, which spanned from 2012 to 2022. The Kaiser-Meyer-Oklin (KMO) and Bartlett's Test, Communalities, and Rotated Component matrix were carried out to analyze the study data. The findings of the study indicate that liquidity, specifically; the cash ratio and current ratio are the most significant predictors of commercial bank growth in Nigeria. The study concluded that commercial bank with high liquidity has the most significant growth rate in Nigeria. It was recommended that banks should endeavour to prudently manage and optimize their liquidity positions to ensure and assure sustained growth that will ensure the interest and expectations of their stakeholders.

keywords:

Growth; Firms’ growth; Accounting predictors; Commercial Banks; Principal Component Analysis

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References:

Adegbie, F. F., Adegbie, O. F., & Fakile, A. S. (2018). Profitability and performance of Listed
Banks in Nigeria. Journal of Economics and Sustainable Development, 9(4), 1-10.

Adeyemi, K. S. & Okafor, R. G. (2023). Exploring the relationship between accounting
predictors and firms' growth in Nigeria: A principal component analysis approach.
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Aladejebi & Olufemi, A. (2018). Predictors of firm performance among selected SMEs in
Lagos, Nigeria. International Journal of Applied Research, 4 (6), 8-17.

Aregeyen, O. (2012). The determinants of firm growth in Nigeria. Pakistan Journal of Applied
Economics, 22 (1), 19-38.

Barney, J. B. (1991). Firm resources and sustained competitive advantage. Journal of
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