IDEAS home Printed from https://ideas.repec.org/a/ibf/gjbres/v1y2007i1p60-69.html
   My bibliography  Save this article

The Determinants of the Capital Structure of Firms in Nigeria: The Financial Managers' Perspectives

Author

Listed:
  • Rafiu Oyesola Salawu

Abstract

The paper examined the considerable factors in deciding on the appropriate amount of equity and debt in the Nigerian banking industry, and the factors influencing banks’ capital structure. Data were gathered through questionnaires administered to the financial managers of 25 listed banks in Nigeria. Cross tabulations and Chi-square were used for data analysis. The result suggests that credit-rating, volatility of earnings and cash flow, bankruptcy or near-bankruptcy, financial distress, transaction costs, fees for issuing debt, and financial flexibility are the important factors in choosing appropriate amount of debt. The most important factor that affects banks’ choice between short- and long-term debts is matching the maturity of debt with life of the asset. The study also reveals that ownership structure and management control, growth and opportunity, profitability, issuing cost, and tax economics associated with debt are the major factors influencing bank’s capital structure. It is, therefore, recommended that banks should adopt a mixed source of financing and choose appropriate ownership structure and management policy.

Suggested Citation

  • Rafiu Oyesola Salawu, 2007. "The Determinants of the Capital Structure of Firms in Nigeria: The Financial Managers' Perspectives," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 1(1), pages 60-69.
    • Handle: RePEc:ibf:gjbres:v:1:y:2007:i:1:p:60-69
    as

    Download full text from publisher

    File URL: http://www.theibfr2.com/RePEc/ibf/gjbres/gjbr-v1n1-2007/GJBR-V1N1-2007-6.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. A. Seetharaman & Vikas Kumar Sahu & A. S. Saravanan & John Rudolph Raj & Indu Niranjan, 2017. "The Impact of Risk Management in Credit Rating Agencies," Risks, MDPI, vol. 5(4), pages 1-16, September.
    2. Matthew Adeolu Abata & Stephen Oseko Migiro, 2016. "Capital Structure and Firm Performance in Nigerian-Listed Companies," Journal of Economics and Behavioral Studies, AMH International, vol. 8(3), pages 54-74.
    3. Sunday Nosa UGBOGBO (Ph.D) & Sunday Nosa UGBOGBO (Ph.D), 2023. "Capital Structure and Corporate Financial Distress of Quoted Non-Financial Firms in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 7(6), pages 1302-1314, June.
    4. Adekola Adeola Adebayo & Folajinmi Festus Adegbie & Rafiu Oyesola Salawu, 2021. "Capital Structure and Profitability of Selected Listed Companies in Nigeria," International Journal of Research and Scientific Innovation, International Journal of Research and Scientific Innovation (IJRSI), vol. 8(1), pages 05-22, January.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ibf:gjbres:v:1:y:2007:i:1:p:60-69. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Mercedes Jalbert (email available below). General contact details of provider: .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.