Objective: This paper investigates the impact of capital structure on financial performance in the Nigerian financial industry. The study focused on ten commercial banks selected from the 32 licensed commercial banks in Nigeria, covering the period from 2013 to 2022.
Methodology: The study employed multiple regression analysis with a particular emphasis on panel regression methods. Dynamic panel models were utilized to account for endogeneity and heterogeneity, providing a thorough assessment of how capital structure influences financial performance in these firms.
Conclusion: The study highlights the significance of capital structure in determining the financial performance of commercial banks in Nigeria. By addressing endogeneity and heterogeneity in the data, the study provides a clearer picture of how the composition of debt and equity affects the banks' performance over time.
Recommendation: Commercial banks in Nigeria should carefully consider their capital structure, as it plays a critical role in their financial performance. Proper management of debt and equity ratios can enhance profitability and ensure long-term financial stability.
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