Investigating Bank Financing and the Financial Performance of Listed Industrial Goods Companies in Nigeria

Abstract

The interplay between the financial constraints and operational realities of manufacturing companies in Nigeria raises critical questions about the effectiveness of bank financing as a tool for enhancing the financial performance of the production companies in Nigeria. The study assessed the effect of bank financing on the financial performance of listed industrial goods companies in Nigeria. Specifically, the study examined the effects of maximum lending rate, bank credits and domestic money supply on the financial performance of listed industrial goods companies in Nigeria between 2014 and 2023. Descriptive and ex-post facto research designs were adopted. The study sample was the population of this study consisting of the 13 listed industrial goods companies in Nigeria using the census sampling method. Ordinary Least Square technique was employed to test the hypotheses. It was found that domestic money supply and banks credit have positive and significant influence on the return on assets. However, outcomes showed that maximum bank lending rate had positive but insignificant influence on ROA. The paper concluded that while bank credits and domestic money supply play crucial roles in enhancing the financial performance of Nigeria's industrial goods companies, the maximum lending rate's impact appears limited. The study recommended among others that banks and other financial institutions should increase the accessibility of credit to industrial goods companies. This can be achieved by developing tailored financial products that meet the specific needs of these companies, thereby supporting their operational and capital expenditure.