For correspondence:-
Received: November 1, 2020 Accepted: December 20, 2020 Published: December 31, 2020
Citation: Capital Adequacy and Financial Performance of Deposit Money Banks with International Authorization in Nigeria. Account Tax Rev 2005; 4(4):78-91 doi:
© 2005 The authors.
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Abstract
This study examines the nexus between capital adequacy and financial performance of deposit money banks (DMBs) in Nigeria. Secondary data were obtained from the audited financial statements of all the eight (8) deposit money banks with International Authorization listed on the Nigerian Stock Exchange spanningfrom 2012-2019. Data were analysed using panelregression techniques. Results showed that loans and advances (LAD) have a positive and significant effect on the financial performance of DMBs with international authorisation in Nigeria. The study concluded that capital adequacy has positive relationship with thefinancial performance of DMBsin Nigeria. Itrecommends that the Central Bank of Nigerianeed to increase the minimum capital base of deposit money banks in Nigeria, since the current ?25 billion and ?50 billion minimum capital baselicense requirement for DMBs with national and international authorisationcannot justify the banking reality of today, especially as a result of the continuous depreciation of the value of local currency naira in the foreign exchange market.
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