DEPOSIT GROWTH RATE, LEVERAGE, AND BANK SIZE: AN EMPIRICAL STUDY OF THEIR EFFECTS ON FINANCIAL PERFORMANCE OF LISTED BANKS

Abstract

The study examines the Deposit Growth Rate, Leverage, and Firm Size: An Empirical Study of Their Effects on Financial Performance of Listed Banks. The study covers the period of seven (14) years from 2010 to 2023. The population of this study consists of thirteen (13) listed deposit money banks on the Nigerian stock exchange as at 31 December, 2023. Multiple regression was used for the panel data analysis in order to establish relationship between the variables of the study. Multiple regression was considered appropriate in view of the fact that it helps in not only establishing relationship between variables. The analysis reveals Firm size has a negative and insignificantly effect on the financial performance proxied by ROE of the listed deposit money banks in Nigeria. This predicts that the performances of high firm of listed deposit money banks in Nigeria are going to increase the profit of the banks and it implies that debt financing is not appropriate for the listed deposit money banks. Furthermore, the findings reveal that Deposit growth rate, leverage had a positive and insignificant effect on return on equity (ROE). This means that Firm size can control the financial performance of banks, it was also found that Deposit growth rate has insignificant positive relationship with financial performance. It can be concluded that the study banks are increasing their Leverage very rapidly but their growth does not produce any outcome to the listed banks in Nigeria. More so, lower Leverage has been found to reduce the return on equity due to the reduction of investment by banks customers. This study recommends that banks should continuing investing their resources and expertise to exercise control over management and increase Firm size through ownership re-orientation which can affect the financial performance of listed deposit money banks.