DETERMINANTS OF CAPITAL STRUCTURE OF SKYE BANK OF NIGERIA PLC

  • Chapters:5
  • Pages:95
  • Methodology:Ordinary Least Square
  • Reference:YES
  • Format:Microsoft Word
(Accounting)
DETERMINANTS OF CAPITAL STRUCTURE OF SKYE BANK OF NIGERIA PLC
ABSTRACT

This study is motivated by a desire to examine the determinants of capital structure of Fidelity Bank Plc. In light of the empirical review and other discussions, a number of questions arose as to whether there is a significant relationship between size of a bank, profitability, growth, tangibility of a bank and its capital structure. Using the Ordinary Least Square (OLS) regression technique with the aid of a computer software E-view 7.0, the empirical findings revealed among other things that, there is a significant relationship between size of a bank, tangibility and its capital structure, while there is no significant relationship the profitability, growth of Fidelity bank and its capital structure. We recommend among other things that, firm should engage in projects that would yield maximum profit to the organization. Firms with high profitability tend to have more internal funding, hence the use of debt would be minimized when taking financing decisions because capital used is achieved from retained earnings.
TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
Background to the Study                     
Statement of the Research Problem                 
Objectives of the Study                 
Research Hypotheses                     
Scope of the Study                     
Significance of the Study            
Definition of Terms                        
References                    
CHAPTER TWO: LITERATURE REVIEW
Introduction                         
Theoretical Framework                
Determinants of Capital Structure Policy        
Capital Structure in the Banking Firm             
Empirical Review                         
The Relationship Between Corporate Performance and
Capital Structure                         
References                            
CHAPTER THREE: RESEARCH METHODOLOGY
Introduction                         
Research Design                     
Population of the Study                     
The Sample Size                            
Sampling Technique                        
Sources of Data                             
Model Specification                     
Method of Data Analysis                
References                     
CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA
Introduction                            
Presentation of Data                         
Data Analysis and Interpretation                 
Test of Hypotheses                         
Discussion of Findings                     
CHAPTER FIVE:    SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS
Introduction                        
Summary of Findings                         
Conclusion                             
Recommendations                        
Bibliography                             
Appendix                                 
CHAPTER ONE
INTRODUCTION
BACKGROUND TO THE STUDY
Following the seminar work of Modigliani and Miller (1958:1963) a substantial amount of effort has been put forward in corporate finance theory to determine the factors that influence a Bank’s choice of capital structure. The important question facing bank industries in need of new finance is whether to raise debt or equity capital the issue of finance has been identified as an immediate reason for bank industry failing or start or to progress. It is imperative for banks in Nigeria to be able to finance their activities and grow over time, if they are ever to play an increasing and predominant role in creating value added, providing employment as well as income in terms of profits, dividends and wages to households, expanding the size of the directly productive sector in the economy, generating tax revenue for the government and facilitating poverty reduction through fiscal transfers and income from employment and Bank ownership. It is important in this regard to understand how banks in Nigeria finance their operation by examining their capital structure decisions.
The corporate sector in the country is characterized by a large number of banks operating in a largely deregulated and increasingly competitive environment. Since 1987, financial liberalization has changed the operating environment of bank by giving more flexibility to the Nigeria financial manager in choosing the capital structure of the bank, therefore, the manager may exercise three main choices: Use retained earnings, borrows, through debt instrument or issue new shares. Hence the standard capital structure of a bank includes retained earnings, debt and equity: These components of capital structure reflect fund ownership structure in the sense that the first and third components reflect ownership by shareholders while the second components represent ownership by debt holder. This is the Pattern found in developing and developed countries (La – Porta et al 1999).
STATEMENT OF THE RESEARCH PROBLEM
Survival and growth needs resources but financing these resources has limitations. The analysis of the impact of capital choice on profit is as important as the overall existence of the banking industries themselves. It is especially important when one is considering the dwindling fortunes of aftermath of global economic recession which might not have unconnected with inappropriate capital structure.
    To this end, the following problem questions are relevant and will be addressed by the study.
What is the relationship between size of bank and the capital structure?
What is the relationship between profitability of a bank and the capital structure?
What is the relationship between growth of a bank and its capital structure?
What is the relationship between tangibility of a bank and its capital structure?
OBJECTIVES OF THE STUDY
The main objective of this objective is to examine the determinant of capital structure of Skye Bank Nigeria PLC (UBA) Nigeria Plc. The specific objectives are:
To find-out the relationship between size of bank and its capital structure.
To find-out the relationship between profitability and its capital structure.
To ascertain the relationship between growth and its capital structure.
To ascertain the relationship between tangibility and its capital structure.
RESEARCH HYPOTHESES
The following hypotheses have been formulated to serve as a base for this research;
There is a significant relationship between size of bank and the capital structure.
There is a significant relationship between profitability and the capital structure.
There is a significant relationship between growth of a bank and the capital structure.
There is a significant relationship between tangibility of a bank and the capital structure.
SCOPE OF THE STUDY
The population of the study is entire banks quoted in the Nigeria Stock Exchange, while the sample is restricted to Skye Bank Nigeria PLC.
The length of period covered by the study is 2007 – 2011.
SIGNIFICANCE OF THE STUDY
The significant of this study is how the determinant of capital structure of Skye Bank Nigeria Plc can choose appropriate mix of debt and equity capital in ordinary to achieve optimum capital structure. This is achieved by looking at factors that determine capital structure in order to protect interest of provides of capital ensure payment of dividend enable bank to use gearing benefit in optimizing return on investment and enhance the Skye Bank Nigeria Plc’s ability to raise new fund.
DEFINITION OF TERMS
Probability is defined as the ratio of earnings before interest tax and depreciation to total assets.
REFERENCES
Modigliani, F. and M.H. Miller, 1958. The cost of capital, Corporate Finance and the Theory of Investment. Am Econ. Reve. 48: 261-277.
Modigliani, F. and M. H. Miller, 1963 Corporate Income Taxes and The Cost of Capital: A Correction Am. Econ. Rev, 53:433-443.
La-Porta, R.F. Lopes-de Sitanes and A. Shleifer, 1999, Corporate Ownership around the word. J. Finance, 54: 471-517.

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Project Details

Department Accounting
Project ID ACC0788
Price ₦3,000 ($14)
Chapters 5 Chapters
No of Pages 95 Pages
Methodology Ordinary Least Square
Reference YES
Format Microsoft Word

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    Project Details

    Department Accounting
    Project ID ACC0788
    Price ₦3,000 ($14)
    Chapters 5 Chapters
    No of Pages 95 Pages
    Methodology Ordinary Least Square
    Reference YES
    Format Microsoft Word

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