Title Page

TABLE OF CONTENT

i

Declaration

ii

Certification

iii

Dedication

iv

Acknowledgement

v

Abstract

vi

Table of Contents

vii

List of Tables

xi

List of Figures

xii

1.1

Background to the study

1

1.2

Statement of the Problem

3

1.3

Research Questions

4

1.4

Objectives of the Study

4

1.5

Research Hypotheses

5

1.6

Scope of the Study

5

1.7

Significance of the Study

6

1.8

Limitations of the Study

7

1.9

Definition of Terms

8

1.10

Organization of the Study

9

CHAPTER TWO: LITERATURE REVIEW

2.1 Conceptual Framework

10

2.1.1 Overview of Deposit Money Banks in Nigeria

10

2.1.3

Capital Structure

17

2.1.4

Optimal Capital Structure

20

2.1.5

Capital Structure, Firm Value and performance

21

2.1.6

The Framework Model

22

2.1.6.1

Ordinary Shares and Performance of Deposit Money Banks

23

2.1.6.2

Debenture and Performance of Deposit Money Banks

25

2.1.6.3

Bonds and Performance of Deposit Money Banks

27

2.1.6.4

Preference Shares and Performance of Deposit Money Banks

30

2.1.6.5

Profit after Tax as a Measure of Banking Performance

36

2.1.7

Determinants of Banks Capital Structure

36

2.2

Theoretical Framework

42

2.2.1

Irrelevant and Relevant Theory of Capital Structure

42

2.2.2

Agency Cost Theory of Capital Structure

42

2.2.3

Pecking Order Theory of Capital Structure

43

2.2.4

The Free Cash Flow Theory of Capital Structure

45

2.2.5

The Static Trade-off Theory of Capital Structure

47

2.2.6

Resource-Based Theory of Capital Structure

48

2.3

Empirical Literature

49

2.4

Literature Gap

53

2.5

Summary

54

3.2

Research Design

55

3.3

Population and Sample Size

56

3.4

Sampling Technique

56

3.5

Method of Data Collection

56

3.6

Model Specification

57

3.7

Techniques of Data Analysis

57

CHAPTER FOUR: RESULTS AND DISCUSSION

4.1

Introduction

59

4.2

Data Presentation

59

4.2.1

Discussion of Data

60

4.3

Test of Hypotheses

60

4.4

Analysis of Data Technique

61

5.2

Conclusion

71

5.3

Recommendations

72

5.4

Contribution to Knowledge

73

5.5

Suggested Areas for Further Study

74

References

75

Appendix

82

List of Tables

Table 4.2.1: Data for Capital Structure and Deposit Money Bank’s Performance

59

Table 4.2.2: Ordinary Least Square (OLS) Result

61

Table 4.2.3: Normality test

62

Table 4.2.4: Serial Correlation Test

63

Table 4.2.5: Heteroskedasticity Test

63

Table 4.2.6: Stability Test

63

Table 4.2.7: Unit Root Test for Profit after Tax (PAT)

64

Table 4.2.8: Unit Root Test for Bond (BND)

64

Table 4.2.9: Unit Root Test for Preference Share (PRFS)

65

Table 4.2.10: Unit Root Test for Ordinary Share (ORS)

65

Table 4.2.11: Unit Root Test for Debenture (DBT)

66

Table 4.2.12: Granger Causality Test

66

Table 4.2.13: Johansen Co-integration

68