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Investment in Fixed Assets and Firm Profitability: Empirical Evidence from the Nigerian Banking Sector

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  • Olatunji, Toyin E
  • Adegbite, Tajudeen A

Abstract

The study examined the effect of investment in fixed assets on profitability of selected Nigerian banks. It also analyzed the significant components of fixed assets investment of selected Nigerian Commercial Banks. Data were obtained from annual reports and accounts of selected Nigerian commercial Banks. Pearson product moment correlation and multiple regressions were employed to analyze the relationship between the dependent variable (Net profit) and independent variables (Building, Land, Leasehold premises, fixtures and fitting, and investment in computers.). Findings show that there is a significant relationship between dependent variable (Net Profit) and the independent variables (Building, information communication and technology, machinery, leasehold, land and fixture and fitting) with the adjusted R2 @ 96%. Therefore, investments in fixed assets have strong and positive statistical impact on the profitability of banking sector in Nigeria. In order to improve bank profitability through efficient management of fixed assets, Nigerian banks should increase fixed assets investments in form of ICT. Fixed assets utilization and productivity needs to be monitored to boost profitability for shareholders’ satisfaction.

Suggested Citation

  • Olatunji, Toyin E & Adegbite, Tajudeen A, 2014. "Investment in Fixed Assets and Firm Profitability: Empirical Evidence from the Nigerian Banking Sector," Asian Journal of Social Sciences and Management Studies, Asian Online Journal Publishing Group, vol. 1(3), pages 78-82.
    • Handle: RePEc:aoj:ajssms:v:1:y:2014:i:3:p:78-82:id:442
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    Cited by:

    1. Etim Uwah, Uwem, 2019. "Capital Expenditure Decisions And Long Term Value Of The Firm: Evidence From Nigerian Manufacturing Companies," International Journal of Contemporary Accounting Issues-IJCAI (formerly International Journal of Accounting & Finance IJAF), The Institute of Chartered Accountants of Nigeria (ICAN), vol. 8(1), pages 152-169, June.
    2. Taibat, Adebukola Atoyebi & Emmanuel, Okpe Onuh & Abdulwaheed, Bamidele Oyebisi, 2024. "Impact of Human Capital Expenditure on Financial Performance of Listed Insurance Companies in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(8), pages 7-20, August.
    3. Salah Mohammed Abdulahi & Mekonnen Kumlachew Yitayaw & Habtamu Legese Feyisa & Wondmagegn Biru Mamo, 2023. "Factor affecting technical efficiency of the banking sector: Evidence from Ethiopia," Cogent Economics & Finance, Taylor & Francis Journals, vol. 11(1), pages 2186039-218, December.
    4. Quoc Trung Nguyen Kim, 2022. "Does Financial Leverage Fit Firm Performance During the COVID-19 Pandemic: Evidence From Vietnam," International Journal of Asian Business and Information Management (IJABIM), IGI Global, vol. 13(1), pages 1-20, January.
    5. Victor, Adediran Elumaro & Okwo, Mary Ifeoma & Nwoha, Chike E. & Eze, Charles Uzodinma & Cynthia Bhake, 2024. "Assets Management and Financial Performance of Listed Consumer Goods Manufacturing Companies in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 8(4), pages 1468-1482, April.
    6. Grant, Delvin & Yeo, Benjamin, 2018. "A global perspective on tech investment, financing, and ICT on manufacturing and service industry performance," International Journal of Information Management, Elsevier, vol. 43(C), pages 130-145.

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