ABSTRACT
The
greatest issue striving against the management ofanyfirm in Nigeria and the
world over is how to minimize cost ofcapital and maximize shareholders wealth.
The study made used of an ex-post facto research design. The data collected
were then lubvlaied and analyzed using the simple regression analysis. The
study revealed that The • :’e: c pi.' of the bank is negative meaning that
without debt financing (D), equity ji.iu,icing (E; and aebl to equity ratio
(D/E), the profitability ofthe bank considered in this study will be negative.
Debtfinancing (D) is negatively related to profitability ofthe bank as it was
assumed that the slope coefficient is constant for the bank. When debts become
relatively high, further increasing generate significant agency of bankruptcy of
f'n.tccui! distress between bondholders and shareholders. This is then
reflected as a >: yaipe relationship. The value of debt financing is
-0.040657, meaning that a unit increase in debt financing will pull down the
profit of the shareholders by 4%. Equity financing exist a positive coefficient
of0.389768 for the bank that is, equityfinancing is positively related to
profitability ofthe bank considered in the study. It then implies that an
increase on equityfinancing ofthe bank, the profitability ofthe bank will
increase by about 40%. It therefore, explained that shareholders ofthe banks
tend to maximize more prefit through equity financing. It is therefore,
perfectly significant. The financial ratio which is debt to equity ratio is
positive with a value of407776.6; it explained that there is a positive
relationship between debt to equity ratio and profitability of the bank under
investigation. An increase on debt-equity financing will bring about 407776.6
units increase in profit of the bank. Conclusively, Debt/equity ratio
significantly influences financial performance, with most investors preferring
to invest in companies with a smaller debt/equity ratio. Also, it could be
concludedfrom the above findings that the performance ofFirst bank Nigeria Pic is
significantly related to the capital structure ratios. /r is recommended that
In improving banks’ performance, share of equity financing in the capital
structure should be increased. To avoid conflict ofmanagers with shareholders
interest, managers should go for long run value maximization ofthe firm which
satisfies both managers and shareholders interest
UGWU, N (2024). Effect Of Capital Structure On The Financial Performance Of Banks In Nigeria:- Ugwu Mabel N. Mouau.afribary.org: Retrieved Oct 30, 2024, from https://repository.mouau.edu.ng/work/view/effect-of-capital-structure-on-the-financial-performance-of-banks-in-nigeria-ugwu-mabel-n-7-2
NNEDINSO, UGWU. "Effect Of Capital Structure On The Financial Performance Of Banks In Nigeria:- Ugwu Mabel N" Mouau.afribary.org. Mouau.afribary.org, 09 Jul. 2024, https://repository.mouau.edu.ng/work/view/effect-of-capital-structure-on-the-financial-performance-of-banks-in-nigeria-ugwu-mabel-n-7-2. Accessed 30 Oct. 2024.
NNEDINSO, UGWU. "Effect Of Capital Structure On The Financial Performance Of Banks In Nigeria:- Ugwu Mabel N". Mouau.afribary.org, Mouau.afribary.org, 09 Jul. 2024. Web. 30 Oct. 2024. < https://repository.mouau.edu.ng/work/view/effect-of-capital-structure-on-the-financial-performance-of-banks-in-nigeria-ugwu-mabel-n-7-2 >.
NNEDINSO, UGWU. "Effect Of Capital Structure On The Financial Performance Of Banks In Nigeria:- Ugwu Mabel N" Mouau.afribary.org (2024). Accessed 30 Oct. 2024. https://repository.mouau.edu.ng/work/view/effect-of-capital-structure-on-the-financial-performance-of-banks-in-nigeria-ugwu-mabel-n-7-2