EFFECT OF CORPORATE INVESTMENT ON INVESTMENT RATE OF DEPOSIT MONEY BANKS IN NIGERIA
Keywords:
Corporate governance, Firm leverage, , Firm size, Firm liquidity, Investment rate.Abstract
The study determined the effect of corporate investment on investment rate of deposit money banks in Nigeria. The specific objective was to assess the effect of firm leverage, firm’s size and firm liquidity on the rate of investment among listed deposit money banks in Nigeria. Ex-Post Facto research design was adopted. The study population was all the thirteen deposit money banks that are listed in Nigeria while the sample comprised of same thirteen deposit money banks in Nigeria. Secondary data were extracted from the banks’ annual reports from 2012 to 2022. Panel regression analysis was used in the study to test the hypotheses. The findings revealed that: firm leverage has a positive but non-significant effect on the investment rate of deposit money banks in Nigeria (p-value = 0.8148); firm size has a significant negative effect on the investment rate of deposit money banks in Nigeria (p-value = 0.000); firm liquidity has a significant negative effect on the investment rate of deposit money banks in Nigeria (p-value = 0.000). In conclusion, leverage emerges as a driver of increased investment, while larger size and higher liquidity appear to constrain investment activities. The study recommends that banks in Nigeria should ensure that risk management practices are robust to mitigate potential downsides of high leverage while leveraging debt for growth.
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