Capital Structure and Financial Performance of Commercial Banks in Nigeria.

Abstract

Capital Structure is a concept in business which have accounted for the financial performance in literature. Thus this study examines the relationship between capital structure and financial performance of commercial banks in Nigeria for the period of (2010 to 2019). Five (5) commercial banks were selected using the Judgmental sampling technique. Data were collected from the financial statements of selected banks. The data was analyzed using E-View 2010. The Unit root test, Granger causality test and panel regression analysis were conducted in this study. We concluded that, capital structure variables used are good predictors and significant with the financial performance of commercial banks in Nigeria. In addition, we concluded that Debt to Equity Ratio, Total Debts, and Total Equity over the period under study do not contribute to the financial performance (Return on Assets) of commercial banks in Nigeria. Furthermore, Equity to Capital Ratio and Debt to Capital Ratios improves the financial performance (Return on Assets) of commercial banks over the years. We therefore recommended that the bank managers should ensure that, capital is spent on productive assets in other to improve the financial performance of the banks, among others.