EXAMINING THE INFLUENCE OF FINANCIAL STRUCTURE ON THE PERFORMANCE OF DEPOSIT MONEY BANKS (DMBS) IN NIGERIA

This study generally examined the Influence of Financial Structure on Deposit Money Banks (DMBs) Performance in Nigeria and specifically attempts to ascertain, explore and evaluate the extent to which short term debt to asset ratio, long-term debt to asset ratio and total debt to equity ratio respectively, affect the Return on Capital Employed (ROCE) of selected DMBs in Nigeria. This study adopted ex-post facto research design on a population thirteen (13) listed DMBs in Nigeria. Purposive sampling was used in selecting a sample size of four (4) deposit money banks. Secondary data were obtained from the annual reports of the selected banks for sixteen years covering the period of 2007 to 2022 which was subjected to descriptive analysis. Granger causality was deployed in exploring the causal relationships between the variables, Ordinary Least Square regression was deployed in testing the hypotheses of the study. The findings revealed that: short-term debt to asset ratio has a significant negative impact on the return on capital employed of selected DMBs in Nigeria (p-value = 0.000); long-term debt to asset ratio significantly and negatively affects the return on capital employed of deposit money banks in Nigeria (p-value = 0.000); total debt to equity ratio has a non-significant positive effect on the return on capital employed of selected DMBs in Nigeria (p-value = 0.1133). The study recommends that management of DMBs in Nigeria should prioritize maintaining a balanced mix of short-term and long-term debt in order to mitigate liquidity risks and ensure smoother cash flow management, ultimately enhancing financial performance