This study examines the impact of capital adequacy ratio (CAR) on the performance of deposit
money banks in Nigeria. Capital adequacy, which reflects a bank’s ability to absorb financial
shocks and maintain stability, remains a critical indicator of financial soundness and regulatory
compliance. The study adopts a longitudinal research design using secondary data obtained from
the financial statements of eight (8) selected deposit money banks in Nigeria over a nine-year
period spanning 2014–2022. The analysis employs regression techniques to evaluate the
relationship between capital adequacy ratio (CAR) and bank performance, measured by Return
on Equity (ROE). Findings reveal that capital adequacy ratio has a positive relationship with bank
performance, with a regression coefficient of 0.058407, indicating that an increase in CAR leads
to an improvement in ROE. However, the relationship is statistically insignificant, as evidenced by
a p-value of 0.3346, suggesting that capital adequacy does not significantly determine the
performance of deposit money banks in Nigeria within the study period. The study concludes that
although higher capital adequacy enhances the capacity of banks to absorb losses and improve
profitability, its effect on performance is not statistically significant. It recommends that deposit
money banks strengthen their capital base while also improving credit risk management practices,
ensure strict compliance with regulatory requirements such as the Banks and Other Financial
Institutions Act (BOFIA) and prudential guidelines, and adopt efficient financial strategies to
enhance overall performance.
S. Gurowa· Journal of Accounting and Fi...· 0 citations
This study examines the impact of Total Bad Debts (TBD) on the performance of deposit money
banks in Nigeria. Total bad debts, which represent unrecoverable loans, remain a critical indicator
of credit risk and a major challenge to bank profitability and financial stability. The study adopts
a longitudinal research design using secondary data obtained from the financial statements of
eight (8) selected deposit money banks in Nigeria over a nine-year period spanning 2014–2022.
The analysis employs the Panel Autoregressive Distributed Lag (ARDL) model to evaluate the
relationship between total bad debts and bank performance, measured by Return on Equity (ROE).
Findings from the descriptive statistics reveal that banks experienced relatively low and unstable
profitability alongside high levels of bad debts during the study period, indicating significant
exposure to credit risk. The regression results show that total bad debts have a negative and
statistically significant effect on bank performance, with a coefficient of -18.66743 and a p-value
of 0.0014. This implies that an increase in total bad debts leads to a substantial decline in return
on equity. Although the correlation analysis indicates a weak positive association between TBD
and ROE (0.03546), further analysis confirms a significant inverse relationship, suggesting that
rising bad debts ultimately reduce profitability. The study concludes that total bad debts
significantly and negatively affect the performance of deposit money banks in Nigeria. It
recommends that banks strengthen credit appraisal and monitoring systems, adopt effective loan
recovery strategies, and implement robust credit risk management practices to minimize bad debts
and enhance financial performance.
S. Gurowa· International Journal of Eco...· 0 citations