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Influence of Firm Size on Financial Performance of Deposit Money Banks Quoted on the Nigeria Stock Exchange

Journal: International Journal of Economics and Financial Research (Vol.4, No. 9)

Publication Date:

Authors : ;

Page : 297-302

Keywords : Firm size; Financial performance; Deposit money; Stock exchange; Influence; Diseconomies.;

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Abstract

This research work investigated the influence of firm size on the financial performance of deposit money banks quoted on the Nigerian stock exchange. The research work is necessitated by the need to find the factors that respond positively or negatively to the financial performance of deposit money banks in Nigeria. Five deposit money banks were sampled with the aid of Taro Yemeni sampling technique to represent the entire banking industry in Nigeria. The firm size proxied by log of total assets represents the explanatory variable while the financial performance measured by profitability proxied by return on asset is the dependent variable. The analysis was conducted using the pooled OLS regression and fixed effect/random effect regression with the aid of STATA for panel regression. In addition, descriptive statistics and correlation analysis were computed. The finding of the study indicates that firm size insignificantly negatively influenced financial performance as a result of diseconomies of scale. The study therefore recommends that the industry should minimize the cost of expansion and enjoy maximum benefits of economies of scale in addition to other factors that may stimulate financial performance should be considered instead of the firm size that indicate insignificantly negative effect.

Last modified: 2018-11-06 18:24:29