Security Investment and Firm Growth of Deposit Money Banks in Nigeria
Abstract
This study examined the effect of security investment on firm growth of listed deposit money banks in Nigeria. Specifically, it investigated the effect of equity investment, derivative, on firm growth. An ex-post facto research design was adopted, focusing on secondary data collected from the annual reports and financial statements of five selected banks from 2012 to 2024. Data analysis involved descriptive statistics for summarizing key variables and panel estimated generalized least squares to test the hypotheses. The findings indicated that: Equity security investment has no significant effect on firm growth of deposit money banks in Nigeria (β = -0.009 p = 0.849). Derivative security has a negative but statistically significant on growth (β = -0.134 p = 0.0003). The study concluded that the differential effects highlight the necessity of considering organizational scale when analyzing the growth potential associated with various financial instruments. The study concluded that the differential effects highlight the necessity of considering organizational scale when analyzing the growth potential associated with various financial instruments, revealing that the nature of financial instruments plays a critical role in shaping growth outcomes. While equity security investment appears relatively neutral in its influence, suggesting a consistent and negligible effect across banks, other forms of security investments demonstrate more pronounced and consequential relationships with firm growth. The study recommended that management should focus on improving the quality of equity holdings by investing in fundamentally strong and high-performing securities rather than increasing the volume of such investments. Derivatives should be used strictly as risk management and hedging tools to protect against market uncertainties such as interest rate and exchange rate fluctuations.
Keywords
Security investmentFirm GrowthEquity Security InvestmentDerivative Security Investment
References
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