ISSN: 2225-8329
Open access
This study is focused on providing empirical evidence on the relationship between corporate financing choice and financial performance of listed Nigerian banks from 2010 to 2016. The objective is to ascertain the effect of corporate financing choice on financial performance of banks in Nigeria by using equity and leverage financing as predictor variables and return on assets (ROA) as a criterion variable. To meet the objective of this study, secondary data obtained from the annual reports and account of Eight (8) selected banks were utilized and analyzed using multiple regressions (OLS) statistical tool. The results of the analysis show that leverage financing (LF) is not statistically significant at 0.05 (5% confidence level). In addition, the study shows that there is a positive relationship between equity financing and financial performance of banks; however the relationship is not significant as p-value of 0.879 > 0.05. This suggests that a percentage increase in equity leaving debt constant will positively increase return on assets (financial performance) of quoted banks in Nigeria but not significantly. Based on this, it was recommended that to improve the financial performance of banks in Nigeria cum return on asset, optimization of the corporate financing mix (debt and equity) should be prioritized. Quoted banks in Nigeria should moderate the choice of leverage financing in favour of more equity financing to improve earnings capacity and to maximize shareholders’ wealth.
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In-Text Citation: (Osirim, Wadike, & Idatoru, 2020)
To Cite this Article: Osirim, M., Wadike, C. G., and Idatoru, A. R. (2020). Corporate Financing Choice and Financial Performance of Banks in Nigeria: Return on Assets Measurement Approach. International Journal of Academic Research in Accounting, Finance and Management Sciences. 10(3), 309-324.
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