Title: RISK ADJUSTED LEVERAGE CAPITAL AND THE PERFORMANCE OF NIGERIAN BANK ASSETS
Abstract: Purpose : This research work seeks to empirically study Risk adjusted leverage capital and the performance of Nigeria bank assets particularly studying three (3) banks recommended by Fitch rating and Bankers magazine as top most three using secondary data for the period 2005 to 2015. Methodology : The Ordinary Least Squares Methodology and cointegration analysis and variables such as debt equity ratio (DER), Returns on assets (ROA), Capital adequacy ratio (CAPR), Returns on equity (ROE), Profit after tax (PAT) will be used Results : The result of the analysis shows that of the three banks being analyzed based on the regression result obtained, measures the performance in the selected banks, having Returns on Equity (ROE) as its dependent variable and debt equity ratio (DER), capital adequacy ratio (CAPR), Returns on asset (ROA), profit after tax (PAT) as its explanatory variables is jointly statistically significant in all the banks. The result shows that financial leverage has a significant impact on performance of bank assets and the impact happens to be positive. Suffice it to say that, as the rate of financial leverage measured by debt equity ratio increases, bank performance measured by return on equity also increases and as risk adjusted capital measured by capital adequacy increases, bank asset performance also increases. This denotes a positive relationship on both variables on bank performance. Nigerian banks should identify a more prudent and sustaining means of improving return on equity. A very low return on equity of 4% as revealed by this study may not be accepted by existing shareholders’ and may not attract a potential investor. This trend will have to be reversed if further investment in equity is to be attracted.
Publication Year: 2017
Publication Date: 2017-01-12
Language: en
Type: article
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