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Abstract:
In order to maintain financial stability and resist negative shocks, it is necessary to identify the determining factors that mostly influence the financial performance of deposit money banks quoted on the Nigeria stock exchange. This study examines the factors influencing financial performance of deposit money banks quoted on the Nigeria stock exchange. The study adopts a descriptive research design using a cross-sectional pooled OLS panel data of 12 years(2005 to 2016) to examine the influence of bank size, credit growth, financial leverage and dividend payout on the financial performance (profitability and liquidity) of deposit money banks quoted on the Nigeria stock exchange. The study utilizes a sample of selected five deposit money banks out of the population of 21 with the use of Yamane's sampling technique. The study adopts panel data OLS regression, fixed effect and random effect regression analysis. The finding of the study indicates insignificantly positive influence of credit growth on financial performance of deposit money banks quoted on the Nigeria stock exchange. The result also indicates insignificantly negative influence of bank size, financial leverage and dividend payout on the financial performance of deposit money banks quoted on the Nigeria stock exchange. The study therefore recommends that deposit money banks in Nigeria should mobilize more deposits in order to enhance their lending capability and should formulate comprehensive and realistic financial plans to boost financial performance instead of relying on financial leverage and payment of dividend. Earnings should be retained for further expansion and growth.
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