EFFECT OF PROFITABILITY ON CAPITAL STRUCTURE AND DIVIDEND POLICY OF LISTED COMMERCIAL BANKS IN NIGERIA
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Abstract
This study investigated the moderating effect of profitability on the relationship between capital structure and dividend policy among listed commercial banks in Nigeria. The research was driven by conflicting findings in previous studies and a lack of focused analysis within the banking sector. The study employed a quantitative research design and used panel data from commercial banks listed on the Nigerian Exchange Group (NGX) over eleven years within the period (2014-2024). The dependent variable, dividend policy was proxied by dividend payout ratio, while the independent variable, capital structure was measured by debt to equity ratio. Profitability, represented by return on asset, was examined as a moderating variable. Firm size and firm age are introduced as control variables. The analytical techniques used was regression analysis. The findings revealed a significant negative relationship between the debt-to-equity ratio (DTE) and the dividend policy and also Profitability, (ROA) has no significant impact in moderating the relationship between Debt-to-Equity Ratio (DTE) and dividend policy. The recommendation of the study is that banks should avoid excessive debt accumulation, as high leverage undermines their capacity to pay dividends and may erode investor confidence and operational efficiency and sustainable profitability should be prioritized to support dividend stability and long-term shareholder value.
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References
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ISSN 28111915 DOI: https://doi.org/10.62244/ajorms.v5i2.145
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