EFFECT OF SHAREHOLDERS FUND ON FINANCIAL PERFORMANCE OF SELECTED LISTED DEPOSIT MONEY BANKS IN NIGERIA
Ndagi Idris Mohammed and Shaba Mohammed
Volume 13 Issue 2
Abstract
This study investigates the effect of shareholders’ fund on the financial performance of listed deposit money banks in Nigeria, with a specific focus on the influence of equity and reserves on return on equity (ROE). Grounded in the Pecking Order Theory, the study adopts an ex post facto research design, utilizing secondary data extracted from the annual financial statements of five purposively selected banks from the Nigeria Stock Exchange Group for the period 2020-2024. Descriptive and inferential statistical tools, including panel least squares regression, were employed to analyze the data. The Hausman specification test determined the most appropriate model between the fixed and random effects estimations. The empirical findings reveal that equity capital has a statistically significant positive effect on financial performance, while reserves exert no significant impact. The study concludes that a well-structured and adequately capitalized shareholders’ fund enhances profitability, stability, and competitiveness among Nigerian banks. It recommends that banks strengthen their equity base and maintain an optimal capital structure to promote sustained financial performance and resilience. Keywords: Shareholders, Financial Performance, Deposit Money Bank
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