ABSTRACT

There has been an argument on whether long term loans affect the capital structure of commercial banks in Nigeria. To contribute to this argument, the study investigated the effect of long term borrowing on the debt ratio and debt equity ratio of commercial banks in Nigeria. The ex-post facto research design was adopted for the study and data were collected from the annual report and financial statement of account of Access Bank Nigeria Plc and internet for the period of 2005 to 2016. Thus, debt ratio and debt- equity ratio served as proxies for capital ratio and they served as dependent variables. The study employed Ordinary Least Square regression method to analyze the date collected. The result of date revealed that long term borrowing has a positive and significant effect on debt ratio and debt- equity ratio. In conclusion, the study argued that long term loans have a significant effect on capital structure of commercial banks in Nigeria. (Represented by Access Bank Nigeria Plc). The study recommended that low interest long term loan should be pursued by the commercial banks in Nigeria in their capital structure policy. 

TABLE OF CONTENTS

Title page i

Declaration ii

Certification iii

Dedication iv

Acknowledgement v

List of tables x

Abstract xi

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study 1

1.2 Statement of the Problem 3

1.3Objectives of the Study 4

1.4 Research Questions 4

1.5 Research Hypotheses 5

1.6 Significance of the Study 5

1.7 Scope of the Study 5

1.8 Limitations of the Study 6

1.9 Definition of Terms 6

CHAPTER TWO

REVIEW OF RELATED LITERATURE AND THEORETICAL FRAMEWORK

2.1 Conceptual Framework 8

2.1.1 Concept of Capital Structure 8

2.1.2 Concept of Bank Loans 10

2.1.1.1 Principles, Processes and Procedures of Granting Bank Loans 11

2.1.1.2 Overview of Commercial Banks’ Loans to Key Sectors in Nigeria 13

2.2 Theoretical Framework 15

2.2.1 Agency Theory 15

2.2.2 Pecking Order Theory 16

2.2.3 Trade-off Theory 16

2.3 Empirical Literature 17

CHAPTER THREE

RESEARCH METHODOLOGY

3.1 Research Design 28

3.2 Sources of Data 28

3.3 Area of the Study 28

3.4 Model Specification 29

3.5 Description of Variables 31

3.6 Techniques of Data Analysis 32

3.6.1 t-statistic 32

3.6.2 F-statistic 32

3.6.3 R-squared 32

3.6.4 Durbin-Watson statistic 33

CHAPTER FOUR

DATA PRESENTATION, DATA ANALYSIS AND DISCUSSION OF FINDINGS

4.1 Data Presentation 34

4.1.1 Debt Ratio 35

4.1.2 Debt-Equity Ratio (DER) 35

4.1.3 Long Term Borrowings (LTBR) 36

4.2 Data Analysis 37

4.3 Test of Hypotheses 41

4.4 Discussion of Findings 42

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 Summary of Findings 44

5.2 Conclusion 44

5.3 Recommendations 45

REFERENCES

APPENDICES