Abstract
The influence of capital structure on deposit money bank financial performance was explored in this study. The secondary data was gathered from the annual reports and accounts of the 14 sampled Deposit Money Banks from 2014 to 2018, and generalized least square multiple regression was used to evaluate the secondary data. According to the findings, total debt to total assets, total debt to total equity, and long-term debt to total assets have little bearing on the financial performance of Nigerian banks. The study also discovered that the ratio of short-term debt to total assets has a considerable influence on a bank's financial success. In light of the findings, it is suggested that bank management strive diligently to reduce the short-term debt to total assets component of their capital structure, since this has a detrimental impact on their financial performance. They also have a tendency to enhance the ratio of total debt to total assets since it improves their financial performance. Long-term debt to total assets ratios should be reduced in capital structure components since they have a negative impact on financial performance.
Highlights
Financial performance constitutes the fundamental objective of every financial sectors, it is a catalyst for transmitting monetary policy impulses to the banking sector and the entire economy
TDTA has a mean value of 0.8051026 (81%) which shows that Deposit Money Banks (DMBs) in Nigeria has an average total debt of 81% that constitute their capital
5.1 CONCLUSIONS This study examines the impact of capital structure on the financial performance of listed deposit money banks (DMBs) in Nigeria
Summary
Financial performance constitutes the fundamental objective of every financial sectors, it is a catalyst for transmitting monetary policy impulses to the banking sector and the entire economy. Capital structures are imperative to the banking industry because, cases of failures in business practices had negatively affected investors’ and public confidence. A solid capital structure combination is the cure for a successful business, since it arises from the drive to maximise shareholder value, and as such, it has a significant impact on a company's capacity to compete. The choice of debt and equity to achieve a strong capital structure with low operating costs and great financial profitability is one of the most pressing concerns managers confront today. The choice of a good balance of debt and equity, the debt maturity schedule, and the precise forms of capital to utilise at a given moment are all factors to consider when deciding on capital structure. Managers must make capital structure decisions to optimise shareholder wealth and a company's intrinsic value, according to (Brigham & Ehrhardt, 2017)
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