EFFECT OF CAPITAL ADEQUACY ON BANKS’ PERFORMANCE IN NIGERIA: 2010 – 2019

Abstract

The study was carried out to examine the effect of capital adequacy on financial performance of listed deposit money banks in Nigeria. The adopted the ex post facto hence data were obtained from financial statements of five DMBs randomly selected for the years 2010 to 2019 giving a total of 50 year end observation. The data were analyzed to bring out the descriptive, correlation and regression statistics. Findings of the study indicate that loan and advances and shareholders’ equity have a positive and significant association with financial performance. The study further revealed that deposit by customers has a negative and significant association with financial performance and concludes that good capital adequacy measures enhance financial performance of listed deposit money banks in Nigeria. In line with the findings of this study, it recommended that commercial banks particularly the deposit money banks should establish capital adequacy measures that clearly outline the management’s view of organization priorities on profitability