Financial Innovation and Earnings per Share of Listed Deposit Money Banks in Nigeria

Abstract

The corporate performance of the banking sub-sector in any economy is not only of interest to the shareholders but also to the stakeholders such as the government, employees, creditors, customers and the general society. However, the DMBs in Nigeria had experienced different phases of corporate failures due mainly to poor financial performance leading to the liquidation, merger and outright revocation of licenses of many DMBs by the Central Bank of Nigeria. Financial innovation had been seen to influence the corporate performance of DMBs. In the light of all these, this study reviewed the effect of financial innovation on the corporate performance of listed DMBs in Nigeria.The study adopted ex-post facto research design. The study population consisted of thirteen (13) listed deposit money banks (DMBs) in Nigeria as of 31st December 2020. The purposive sampling technique was used to sample 12 listed DMBs based on the availability of data representing 92 percent of the population. The period of study covered eleven (11) years covering 2010-2020. Secondary data were sourced from the published annual reports of the DMBs and National Bureau of Statistics (NBS). The validity and reliability were premised on the certified auditors' opinions given on the annual reports based on Sections, 401-404, CAMA,2020, pre-established degree of checks by the FRCN, CBN vetting/approval of the annual reports and management of the DMBs preparation of the reports in line with IFRS framework. The study employed descriptive and inferential (multiple regression) statistics to analyze the data at 5% level of significance.The study found that financial innovation had significant effect on earnings per share (EPS) (Adj. R2= 0.22; F (5,10) = 254.96; p < 0.05). The study concluded that financial innovation (FI) was a significant determinant of corporate performance. The study recommended that the management of the DMBs should take conscious efforts in their strategies, policies and plans to ensure their investments in financial innovation brings about the desirable outcome of improving performance.