Corporate Restructuring and Financial Resilience of Deposit Money Banks in Nigeria

Abstract

The study examined corporate restructuring (COR) and financial resilience of Deposit Money Banks (DMBs) nexus in Nigeria from 2009-2020. The regressor is corporate restructuring measured by financial restructuring (FIRE), asset restructuring (ASSR), operational restructuring (OPR), and capital restructuring (CAR). Meanwhile, the regressand is financial resilience (FINR) measured by Z-score. The study focused on fourteen (14) quoted DMBS out of the twenty-one (21) quoted DMBs in the periods under study. The paper sourced data from the annual financial reports of the sampled DMBs under review. On the overall, the study supported the Random Effect Model(REM) as evidenced by both the Hausman test and Breusch Pagan Test. Meanwhile, the selected DMBs have common heterogeneous factors that determine the effect of corporate restructuring on the financial resilience of DMBs in Nigeria over the study periods. The study discovered that financial restructuring exerted negative significant effect on financial resilience while asset and capital restructuring exerted positive high effects on financial resilience. However, operational restructuring exerted positive minimal effect on the financial resilience. In conclusion, corporate restructuring vis-à-vis asset and capital restructuring is essential for achieving a banking industry that is financially resilient. As such, bank regulators should ensure that all toxic assets are addressed. Lastly, to avoid instances of bank crisis, Nigerian bank management should consider capital restructuring as one of the most feasible bank policy for ensuring that the banking industry is financially resilience.