Impacts of Corporate Structural Changes on Performance of Banks and Non-Bank Financial Institutions in Nigeria, 2005-2019
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Published:
Jun 28, 2024
Keywords:
Corporate Structure, Debt, Equity, Performance, Dividend Per Share, Gross Earnings
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Abstract
This study investigated the impacts of corporate structural changes on performance of banks and non-bank financial institutions in Nigeria covering a period of 15 years (2005-2019). The capital structural change was captured with absolute change in debt equity ratio, total debt ratio, long-term debt ratio short-term debt ratio while the performance was measured with dividend per share and gross earnings. The study adopted ex-post facto research design which provides empirical solutions to research problems by using already existing data. The secondary data was extracted from the published financial report of the sampled firms. Population of the study included all the 14 quoted Deposit Money Banks (DMBs) and 25 Insurance Companies in operation in Nigeria. The sample size of the study is delimited to 10 quoted DMBs and 10 Insurance firms in Nigeria and this was achieved through random sampling technique. The collected data were analyzed using quantitative econometric techniques such as descriptive analysis, correlation analysis and panel regression analysis. It was discovered that when the model was controlled with firm size and asset tangibility, absolute changes in total debt ratio, absolute changes in long term debt ratio and absolute changes in short term debt ratio have a positive but insignificant effect on gross earnings of deposit money banks and insurance companies in Nigeria. Also, it was
disclosed that there is a significant effect of absolute changes in the components of capital structure on dividend per share.
Article Details
How to Cite
Olaoye, Festus Oladipupo, Oyindamola Adesola Fakiyesi, and Adebola Abass Jabar. 2024. “Impacts of Corporate Structural Changes on Performance of Banks and Non-Bank Financial Institutions in Nigeria, 2005-2019”. ABUAD Journal of Social and Management Sciences 5 (1), 1-27. https://doi.org/10.53982/ajsms.2024.0501.01-j.
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References
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Kluwer, R. (2017). The effect of ownership structure on corporate financial performance; a meta-analysis. A thesis submitted to the Masaryk University, 1-77.
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Muhammed U. (2019).The impact of capital structure on financial performance of consumer goods industry in Nigeria. Open journal of Accounting, 8(4), 11-27.
Nguyen, Tran, Dinh, Lai & Pham, (2015). Impact of ownership structure and performance of Vietnamese banks. International Journal of Advances in Management and Economics, 27(1), 116-124.
Ngwoke, O. M. &Nwanneduike, S. U. (2019). Effects of capital structure on financial performance of food and beverage companies in Nigeria (2007-2016). International Academy Journal of Management, Marketing and Entrepreneurial Studies, 7(1), 1-17.
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https://doi.org/10.7763/JOEBM.2015.V3.232
Ogosi, C. D. &Agbaeze, E. K. (2018). Structure and organizational performance in the Nigerian banking system. European Journal of social Sciences, 56(1), 37-48.
Olaoye F. O. &Fakiyesi, O. A. (2018). Corporate structural changes and financial reporting in Nigerian banking industry. Advances in Social Sciences Research Journal, 5(5), 345-354.
https://doi.org/10.14738/assrj.55.4412
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Raji, S., Bamgbose, F., Olusegun, B. &Abidoye, M. (2018). Effect of recapitalization on banks' financial performance in Nigeria. International Journal of Contemporary Research and Review, 9(1), 1-11.
Salawu, R. O. (2020). An empirical analysis of the capital structure of selected quoted companies in Nigeria. The International Journal of Applied Economics and Finance, 1(2), 16-28.
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https://doi.org/10.3846/ijspm.2020.13776
Stella, T. D. (2018). Effects of structural change on performance of selected small and medium enterprises in Lagos state. Strategic Management Journal, 31(8), 892-902.
Terzungwe, N. &Abdulateef, Y. (2016), Capital structure and operating performance of listed conglomerate firms in Nigeria. International Journal of Finance and Accounting, 5(2), 126-133.
Yakubu, S., Baba, N. Y. & Ibrahim, A. (2016). Capital structure and profitability of deposit money banks: empirical evidence from Nigeria. European Journal of Business and Management 8(23), 1-12.
Yinusa, O. G., Adelopo, I., Rodionova, Y. & Samuel, O. L. (2019). Capital structure and firm performance in Nigeria. African Journal of Economic Review, 7(1), 31-56.
Adesina, J. B., Nwidobie, B. M. & Adesina, O. O. (2015). Capital structure and financial performance in Nigeria.International Journal of Business and Social Research, 5(2), 21-31.
Adeyemi, A. Z., Unachukwu, J. C. &Oyeniyi, K. O. (2017). Capital structure and its effect on the financial performance of Nigerian insurance industry. International Journal of Business & Law Research, 5(3):8-15
AlamSiddik, M. N., Sajal, K. &Shanmugan, J. (2017). Impacts of capital structure on performance of banks in a developing economy: evidence from Bangladesh.International Journal of Financial Studies, 5(2), 13-29.
https://doi.org/10.3390/ijfs5020013
Almajali, M., & Shamsuddin, Z. (2019). The effect of capital structure on performance of insurance companies: evidence from Jordan. International Journal of Accounting, 4(20), 64-73.
Andi, M., Abdul-Rahman, M., Zainuddin, R. &Suriyanti, S. (2020). Financial performance as mediator on the impact of capital structure, wealth structure, financial structure on stock price: the case of the Indonesian banking sector. European Journal of Business and Management Research, 5(5), 750-781.
https://doi.org/10.24018/ejbmr.2020.5.5.526
Assad, N. N. (2016). Effect of capital structure on firm profitability (An empirical evidence from London, UK), Global Journal of Management and Business Research 16 (4), 8 -20.
Babatunde, A., Bolade, O. &Olasusi, A. (2019). Capital structure and corporate performance of selected firms on the Nigerian stock exchange. Business and Economic Research, 3(2),77-86.
https://doi.org/10.31014/aior.1992.02.03.136
Bishnu, P. B. (2020). Effects of capital structure on financial performance of insurance companies in Nepal. International Journal of Accounting and Financial Reporting ,10(3), 1-12.
https://doi.org/10.5296/ijafr.v10i3.17674
Braik, F. &Messar, M. (2019). Influence of Capital Structure on firm performance; empirical evidence from Jordanian Banking Industry. Les Cahiers du Cread, 34(2), 1-22.
Chadha, S. & Sharma, A. K. (2015). Determinants of capital structure: an empirical evaluation from China. Journal of Advances in Management Research, 12(1), 3-14.
https://doi.org/10.1108/JAMR-08-2014-0051
Chechet, I. &Olayiwola, A. B. (2015). Capital structure and profitability of Nigeria quoted firms. the agency cost theory perspective. American International Journal of Social Science, 3(1), 139-158.
Chuke, N. E. & Kenneth, C. A. (2018). Impact of capital structure on performance of commercial banks in Nigeria. International Journal of Economics and Financial Issues 8(2), 298-304.
Cuibing, W. (2019). The relationship between capital structure and profitability of USA manufacturing companies; an empirical analysis. A thesis presented to Morehead State University, USA, 1-81.
Godfrey, C. E. (2018). Capital structure and commercial banks performance in Nigeria. International Journal of Social Science Management, 8(2), 1-14.
Hafiz, U. (2017). A review on the effect of capital structure on financial performance of deposit money banks in Nigeria. International Journal of Management Science 2(1), 12-32.
Hasan, B., Ahsan, M., Rahaman, A. &Alam, N. (2019). Influence of capital structure on firm performance: evidence from Bangladesh. International Journal of Business and Management, 9(5), 184-194.
https://doi.org/10.5539/ijbm.v9n5p184
Iavorskyi, M. (2017). The Impact of capital structure on firm performance: evidence from Ukraine. An Unpublished MA Thesis, Department of Financial Economics, Kyiv School of Economics, Ukraine, 1-121.
Ikpefan, O. A., Okorie, U. C., Agwu, M. E. &Achugamonu, B. U. (2017). Bank capitalization and cost of equity on profitability of Nigeria deposit money banks - general moment approach. International Review of Management and Business Research, 3(4), 1-20.
Isabwa, K. H., Joel, O. N. & Derek, N. N. (2016). Effects of organizational restructuring on firm performance: a case of national bank of Kenya. Global Journal of Advanced Research, 3(1), 43-49.
Iyoha A. O. &Umoru, D. (2017). Capital structure and firm financial performance in Nigeria; empirical evidence of the casual link. The Journal of Contemporary Economy 3(2), 1-15.
Jiahui, M. A. (2015). Relationship between capital structure and firm performance, evidence from growth enterprise market in China. CSCanada Management Science and Engineering Journal, 9(1), 14-29.
Joseph, K. S. & Tabitha, N. (2016). Effect of capital on the financial performance of commercial banks in Kenya. Asian Journal of Business and Management, 4(5), 1-18.
Juan, G. M. & Gonzalo, R. C. (2019). Capital structure and performance in Latin American companies. Economic Research Journal, 22(5), 2171-2188.
https://doi.org/10.1080/1331677X.2019.1697720
Kajongwe, C; Bhiri, T &Chirovamavi, F. (2020). An assessment of financial structural change on the efficiency of commercial banks in Zimbabwe. Journal of African Interdisciplinary Studies, 4(5), 65 - 78.
Kayode, P. A. &Adewoye, A. O. (2020). Capital structure and stock price nexus: evidence from financial and real sector firms in Nigeria. Journal of Economics and Financ,e 11(1), 1-12.
Kerim, A., Alaji, J., & Innocent, I. O. (2019). Effect of capital structure on the profitability of listed insurance firms in Nigeria. American International Journal of Economics and Finance Research, 1(2), 36-45.
https://doi.org/10.46545/aijefr.v1i2.69
Khadijat, Y. &Rodiat, L. (2018). Effect of ownership structure on financial performance of deposit money banks in Nigeria. Journal of Accounting and Management, 8(2), 1-10.
Kluwer, R. (2017). The effect of ownership structure on corporate financial performance; a meta-analysis. A thesis submitted to the Masaryk University, 1-77.
Mathewos W. B. (2016). The impact of capital structure on financial performance of commercial banks in Ethiopia. Global Journal of Management and Business Research 16(8), 1-11.
Mohammad, A. A. &Faudziah, H. F. (2018). The impact of ownership structure on firm performance: evidence from Jordan. International Journal of Accounting, Finance and Risk Management, 3(1), 1-4.
https://doi.org/10.11648/j.ijafrm.20180301.12
Muhammed U. (2019).The impact of capital structure on financial performance of consumer goods industry in Nigeria. Open journal of Accounting, 8(4), 11-27.
Nguyen, Tran, Dinh, Lai & Pham, (2015). Impact of ownership structure and performance of Vietnamese banks. International Journal of Advances in Management and Economics, 27(1), 116-124.
Ngwoke, O. M. &Nwanneduike, S. U. (2019). Effects of capital structure on financial performance of food and beverage companies in Nigeria (2007-2016). International Academy Journal of Management, Marketing and Entrepreneurial Studies, 7(1), 1-17.
Nilesh, P. M. (2016). A study on capital structure analysis and profitability of Chinese tyre industry. Pacific Business Review International, 8(3) 11-32.
Nora, A. A. & Anis, F. R. (2015). Ownership structure and bank performance. Journal of Economics, Business and Management, 3(5), 483-488.
https://doi.org/10.7763/JOEBM.2015.V3.232
Ogosi, C. D. &Agbaeze, E. K. (2018). Structure and organizational performance in the Nigerian banking system. European Journal of social Sciences, 56(1), 37-48.
Olaoye F. O. &Fakiyesi, O. A. (2018). Corporate structural changes and financial reporting in Nigerian banking industry. Advances in Social Sciences Research Journal, 5(5), 345-354.
https://doi.org/10.14738/assrj.55.4412
Parvesh, K. A. &Afroze, N. (2018). An empirical analysis of capital adequacy in the Chinese private sector banks. American Journal of Research Communication, 2(11), 1-15.
Raji, S., Bamgbose, F., Olusegun, B. &Abidoye, M. (2018). Effect of recapitalization on banks' financial performance in Nigeria. International Journal of Contemporary Research and Review, 9(1), 1-11.
Salawu, R. O. (2020). An empirical analysis of the capital structure of selected quoted companies in Nigeria. The International Journal of Applied Economics and Finance, 1(2), 16-28.
https://doi.org/10.3923/ijaef.2007.16.28
Seger, J. & Pfnur, A. (2021). The impact of structural changes on corporate real estate ownership; evidence from Germany. International Journal of Strategic Property Management 25(1), 1-16.
https://doi.org/10.3846/ijspm.2020.13776
Stella, T. D. (2018). Effects of structural change on performance of selected small and medium enterprises in Lagos state. Strategic Management Journal, 31(8), 892-902.
Terzungwe, N. &Abdulateef, Y. (2016), Capital structure and operating performance of listed conglomerate firms in Nigeria. International Journal of Finance and Accounting, 5(2), 126-133.
Yakubu, S., Baba, N. Y. & Ibrahim, A. (2016). Capital structure and profitability of deposit money banks: empirical evidence from Nigeria. European Journal of Business and Management 8(23), 1-12.
Yinusa, O. G., Adelopo, I., Rodionova, Y. & Samuel, O. L. (2019). Capital structure and firm performance in Nigeria. African Journal of Economic Review, 7(1), 31-56.