Moderating Effect Of Institutional Ownership Structure On The Relationship Between Leverage And Financial Performance Of Listed Deposit Money Banks In Nigeria

Abstract

The study examines the Moderating effect of Institutional Ownership Structure on the relationship between leverage and the financial performance of listed deposit money banks in Nigeria. The problem facing entities in Nigeria lies in financing either to source equity or debt. Considering a bank's capital structure is imperative not just to boost earnings but also its effect on the organization's capability to manage competitive environments. The Study covers the period of twelve (12) years from 2010 to 2021. The Sample size of this study includes all thirteen (13) Banks listed in the Nigerian Exchange Limited (NEL) as at 31 December 2021. In view of the availability of data for thirteen (13) Banks, the study adopted a Census sampling approach by studying the thirteen (13) Banks as the population of the study. Multiple regression was used for the panel data analysis in order to establish the effect and relationship between the variables of the study. While Correlation and descriptive statistics were also employed. The analysis in model one reveals that leverage and institutional ownership structure have a positive and significant effect on the financial performance proxied by ROE of the listed deposit money banks in Nigeria. It was found that institutional ownership structure moderated the leverage and non-performing loan relationship, against financial performance was negatively significant. This study concluded that the interaction between institutional ownership structure and financial performance was found to be positive and significantly influenced financial performance. Institutional shareholding moderates the relationship between leverage and financial performance significantly. It is therefore recommended that banks should maintain an appropriate proportion of debt with equity in their capital structure if return on equity is to be improved. They must also be concerned with utilizing these debts effectively and efficiently.