INVESTMENT INTENSITY AND PERFORMANCE DYNAMICS IN NIGERIAN DEPOSITMONEY BANKS

Abstract

This study investigated the effect of investment intensity on performance
dynamics among Nigerian deposit money banks between 2013 and 2023.
The research adopted an ex post facto design, since the data used were
already in existence and extracted from the published annual financial
statements of the sampled banks. The population comprised sixteen (16)
listed deposit money banks on the Nigerian Exchange Group as of
December 2023, all of which were purposively selected based on data
availability. The study utilized secondary panel data, analyzed through
descriptive statistics, correlation analysis, and random effects panel
regression models using the E-Views econometric software. Two models
were estimated: one assessing the effect of long-term investment
intensity (LTIV) on earnings per share (EPS), and the other examining
its effect on market price per share (MPS).The regression results
revealed that LTIV exerted a negative but statistically insignificant effect
on both EPS and MPS. Specifically, the coefficients (-41.77 for EPS and
-4.67 for MPS) indicated that higher long-term investment intensity
marginally reduced profitability and market valuation, though not
significantly. The R-squared values (0.162 and 0.097) showed that
investment intensity explained only a small proportion of variations in
performance indicators.The study concluded that increasing long-term
investment intensity does not significantly enhance profitability or share
value of Nigerian deposit money banks. It therefore recommended that
banks should optimize rather than expand their long-term investment
portfolios, focusing on efficient asset utilization and short-term
productive investments to improve performance and shareholder
returns.