2022 Archive
| 1 |
Title: AN ANALYSIS OF FINANCIAL LEVERAGE AND FINANCIAL PERFORMANCE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA.pdf Author: Udochukwu Godfrey Ogbonna, John Chika Onwuchekwa & Eki-Allen Obomo David Abstract: Abstract This paper is an investigation of the relationship between financial leverage and financial performance in deposit money banks in Nigeria. Financial performance was measured using Return on Assets (ROA) while long-term debts (LTD), short-term debts (STD), and total debts served as the variables for financial leverage. The data for the analysis was extracted from the financial statements and annual reports of the 5 banks in the sample for the ten-year period 2011-2020. The study adopted the multiple regression analysis and adopted panel data regression estimation technique. Descriptive statistics and correlation analysis were employed. In addition, the unit root test, Hausman test, and residual normality test were used for diagnosis. Our results indicated that long-term debt has a negative and insignificant effect on return on asset, short-term debt is negative and significant with return on asset, and total debt is positive and insignificant with return on asset. Thus, it is recommended that bank management give more incentives to STD suppliers, observe due diligence in borrowing for investment, and consider a tradeoff between STD and LTD in deciding on debt capital to optimize their performance. View |