Effects of Financial Leverage on Shareholders' Return of Deposit Money Banks in Nigeria
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Date
2016
Authors
Journal Title
Journal ISSN
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Publisher
Faculty of Management Sciences, University of Ilorin, Ilorin
Abstract
Financial leverage is capable of increasing shareholders return as well as exposing shareholders to risk. This study examines the effect of financial leverage on shareholders return of deposit money bank in Nigeria from 2005-2014. Utiilising the panel data regression method on data obtained from the annual financial report of 14 deposit money banks. The study finds that debt-equity ratio and interest coverage ratio are positively correlated with shareholders returns. However, debt-equity ratio significantly impact on shareholders return than interest coverage ratio. The study concludes that financial leverage helps to achieving the wealth maximization objective of shareholders of Nigerian deposit money banks. It therefore recommends that bank management should continue to employ debt capital in a way that enhances shareholders wealth
Description
Keywords
Financial leverage, Shareholders' return, Debt-equity ratio, interest coverage ratio, Deposit Money Banks
Citation
Salman, R. T. & Hassan Y. (2016). Effects of Financial Leverage on Shareholders’ Return of Deposit Money Banks in Nigeria. Ilorin Journal of Management Sciences, 3(1), 86-93.