IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 10 NO. 7 2024
DOI: 10.56201/ijbfr.v10.no7.2024.pg17.30


Determinants of Financial Performance of Deposit Money Banks Listed on the Nigeria Stock Exchange

Aza, Ibrahim Eyigege


Abstract


Finding the key factors influencing the financial performance (FP) of deposit money banks (DMBs) listed on the Nigerian Stock Exchange (NSE) is essential for maintaining financial stability and withstanding unfavorable shocks. The current study looks on the factors that affect DMBs that are listed on the NSE's FP. The study uses a descriptive design to examine the impact of bank size, credit growth, financial leverage, and dividend payout on the profitability and liquidity of DMBs listed on the NSE. It does this by using a cross-sectional pooled OLS panel data set that spans 10 years (2013 to 2022). Yemane's sampling strategy is used to choose five DMBs from the total population of 21. Regression analysis with fixed effects, random effects, and panel data OLS regression are used in this work. The conclusion shows that the FP of DMBs listed on the NSE is highly impacted positively by bank size and credit growth, significantly negatively by financial leverage, and marginally positively by dividend payout. Consequently, the study suggests that DMB in Nigeria, rather than depending solely on financial leverage and dividend payments, should develop comprehensive and realistic financial plans to improve FP and mobilize more deposits to strengthen their lending capability. Retaining earnings will allow for future growth and expansion.


keywords:

dividend payout, Bank size, financial leverage, profitability, liquidity.


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