Determining the Effect of Capital Structure on the Performance of Deposit Money Banks: Evidence from Nigeria

PAUL KUMAR, NDUBUISI KUMAR

Abstract


This study sets out to evaluate the effect of capital structure on the performance of Deposit Money Banks (DMBs) using Nigeria as reference point. Data for the study were obtained from secondary sources specifically from the audited annual financial reports of some selected Deposit Money Banks in Nigeria. The data were analysed using Autoregressive Distributed Lag (ARDL) method. Findings revealed mixed impact of capital structure variables on performance indicators. The result also showed positive relationship between bank size and performance indicators used in the study. Despite the mixed results,  the study recommends  that bank management should  place  more emphasis on using retained earnings to finance investments followed by owners equity in that order as recommended by pecking order theory.


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