Increased debt boosts value of Nigerian banks, but risks loom large.
The study looked at how financial leverage affects the value of listed banks in Nigeria. They analyzed data from seven banks over a ten-year period. The researchers found that having more debt compared to assets can increase a bank's value. However, having more debt compared to capital or equity can decrease a bank's value. They suggest that banks in Nigeria should use debt wisely to maximize shareholder wealth and avoid excessive debt levels.