CAPITAL ADEQUACY AND RETURN ON ASSETS OF DEPOSIT MONEY BANKS QUOTED IN NIGERIA

CAPITAL ADEQUACY AND RETURN ON ASSETS OF DEPOSIT MONEY BANKS QUOTED IN NIGERIA

Author by Dr. Peter Ogbebor

Journal/Publisher: Babcock Journal Of Economics, Banking & Finance

Volume/Edition: 6

Language: English

Pages: 134 - 148

Abstract

ABSTRACT
The performance of a banking institution is largely driven by its ability to increase its customers' patronage, retain them and manage its assets and liabilities to enhance optimal returns. This can be done through banks maintaining the return on assets and quality of assets for better performance. In Nigeria, despite the fact that banks are highly regulated, many have failed due to capital inadequacy and mismanagement. This study focuses attention on the effect of return on assets in the financial performance of deposit money banks (DMBs) quoted in Nigeria. This study adopted an ex-post facto research design. The target population for this research comprised 14 deposit money banks quoted in Nigeria which were in operation during the period: 2008 - 2017 for which secondary data were collected. The study employed ordinary least squares regression analysis. The findings of this research showed that capital adequacy has a positive and significant effect on financial performance using return on assets which indicated that an additional increase in capital adequacy ratio would cause return on assets to increase by 0.057. However, the effects of capital adequacy on financial performance of the banks studied are significant (p< 0>


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