CAPITAL STRUCTURE AND PROFITABILITY OF LISTED DEPOSIT MONEY BANK IN NIGERIA

Abstract

The paper examines capital structure and profitability of listed deposit money banksin Nigeria. This study therefore investigates how capital structure affects the net interest margin of Nigerian deposit money banks. In achieving this, 14 banks that are listed on the Nigeria Stock Exchange (NSE) make up the study's population. The sample consists of the six (6) systemically selected banks in Nigeria for a period of 2012 to 2021. Panel data analysis, the fixed effect and random effect models were used. The findings shows that long term debt to total asset and total debt to total asset are statistically significant determinants of the net interest margin in Nigerian deposit money banks while total equity to total asset, total asset, risk and income tax expenses to earnings before taxes are not statistically significant determinant of deposit money banks’ net interest margin in Nigeria. This reveals that long-term debt and equity statistically influence the net interest margin of deposit money institutions in Nigeria. Because capital structure leverage has a key role in determining a bank's net interest margin, the study therefore advised Nigerian deposit money banks to be cautions of it.