IMPACT OF FIRM CHARACTERISTICS ON CAPITAL STRUCTURE OF QUOTED FINANCIAL FIRMS IN NIGERIA (2012-2023)

Poor financial structure of some firms has led to financial problems in firms. Similarly, firm characteristics has serious impact on the performance of the firm. The study therefore evaluated the impact of firm characteristics on capital structure of financial firms in Nigeria for the period 2012-2023. Ex-post facto research design was adopted for the study. Data extracted from the annual reports of the firms for the period of study were subjected to descriptive and inferential statistics. After some diagnostics tests and test for appropriate estimation technique, generalized random effect robust model was adopted. The result of the analysis indicates that firm size has positive and significant effect on firms’ leverage of financial firms with a regression coefficient of 2.631 and p-value of 0.000. Profitability has positive but insignificant impact on leverage of financial firms in Nigeria having a regression coefficient of 0.543 and p-vale of 0.697 while firm liquidity has a negative but insignificant impact on firm financial leverage with regression coefficient of 0.248 and p-value of 0.445. The study recommends that financial firms should drastically reduce the level of dividend paid so as to have more retained earnings to reduce dependent on debt financing. For increase in profitability (ROA), use of debt financing should be considered, when necessary, as the firm would benefit from debt tax shield. This would enhance the overall firms’ performance. Financial firms should strive towards maintaining or optimizing its liquidity as it has no significant impact on leverage of firms. This would ensure that there is no idle fund and invest as much as possible, as falling back on debt when faced with liquidity problem would not affect the profit performance