Effect of Capital Adequacy on Financial Performance of Deposit Money Banks in Nigeria (2012-2023)

Student: Kasarachi Faithwin Uche (Project, 2025)
Department of Accounting
Rhema University, Aba, Abia State

Abstract

ABSTRACT The study examines the Effect of Capital Adequacy on the Financial Performance of Deposit Money Banks, listed on the Nigerian Exchange Group (NGX) from 2012 to 2023. The researcher utilized Assets Quality, Assets Base and Liquidity as proxies for capital adequacy and employed Economic Value Added (EVA) as the metric for financial performance. The study applied descriptive analysis and multiple regression models. The result revealed a significant positive relationship between Assets Base and EVA, indicating the banks with stronger capital bases that tend to perform better financially. However, Assets Quality and liquidity showed weaker relationship with EVA suggesting that they are not strongly correlated with financial performance as capital base; it recommends that Deposit Money Banks should focus on strengthen their capital base to enhance financial performance and additionally regulatory authorities should continue to enforce capital adequacy requirements to ensure stability of the banking sector.

Keywords
capital financial performance adequacy banks assets deposit money effect quality
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