Determinants of Capital Structure of Banks with International Authorization Evidence from Nigeria

Main Article Content

Obi, Henry Kenedunium
Ebiringa, Oforegbunam Thaddeus
https://orcid.org/0000-0001-8780-3698

Abstract

This paper investigated the determinants of capital structure of banks with international authorization in Nigeria. The study is motivated by the recent trend of Nigerian banks expanding to the West and Central African regions, with increased use of debt instruments to boost their capital base. The study employed a purposive sampling technique to identify eight (8) banks listed on the Nigerian Stock Exchange authorized to expand outside Nigeria as holding companies that have required data for analysis variables for the period 2010-2019. The hierarchical regression analysis technique was employed, with results showing that firm size is significant while working capital and profitability are insignificant determinants of capital structure of banks with international authorization. This paper concludes that firm size is the major significant determinant of capital structure decision of banks that have international authorization in Nigeria. The paper recommends that Nigerian banks while growing their size as an internationalization strategy, must exercise caution in the excessive use of debt capital instruments, given their likelihood of exposing banks to leverage risk, base-ownership erosion and management control dilution.

Keywords: Capital Structure, Profitability, Working Capital, Firm Size, Financing Leverage, Management Control

Article Details

Determinants of Capital Structure of Banks with International Authorization: Evidence from Nigeria. (2024). African Journal of Management and Business Research, 15(1), 01-13. https://doi.org/10.62154/x9nrbf38
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Copyright (c) 2024 Obi, Henry Kenedunium, Ebiringa, Oforegbunam Thaddeus (Author)

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Obi, Henry Kenedunium, Nnamdi Azikiwe University, Awka, Nigeria.

Department of Accounting,

Nnamdi Azikiwe University, Awka, Nigeria.

Ebiringa, Oforegbunam Thaddeus, Federal University of Technology, Owerri.

Department of Entrepreneurship & Innovation,

Federal University of Technology, Owerri.

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