Abstract
Capital Structure and Commercial Banks Performance in Nigeria
Highlights
The banking institutions are financial institutions that play the intermediation role between the surplus and deficit sectors in any economy
The banking sector is of great interest to investors because banks are primarily concerned with liquidity and much more committed to solvency and their liabilities are majorly in short-term which are payable on demand with few fixed costs and low operating leverage compare to other counterpart sectors of the economy like telecommunication and manufacturing
This study examined the effect of capital structure on the performance of commercial banks in Nigeria using data from 14 financial firms listed on the Nigeria Stock Exchange for the period of eight 8 years (2009 - 2016)
Summary
The banking institutions are financial institutions that play the intermediation role between the surplus and deficit sectors in any economy. It is possible that the amount given as loan is less than the total sum paid by the deficit sector and in that case, the banking institution is supposed to payback the surplus sector from the equity of the banks (Al-Mutairi & Naser, 2015). The capital structure theory is an essential theory in finance as it addresses sources of finance available to business organizations wishing to raise funds to finance their operations. These includes equity sales, retained earnings, bonds, bank loans, accounts payable and line of credit (Diamond,1984; Ross, Schwaiger & Winkler, 2003) and possibly few other interest-bearing debts. Decision relating to capital structure is of great important for any organization since there is need to maximize return to the various stakeholders in the business and such decision has a considerable influence on the firms’ capability to deal with competitive environment (Awunyo-Vitor & Badu, 2012)
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