GROWTH INDICES AND MARKET CAPITALIZATION OF DEPOSIT MONEY BANKS IN NIGERIA

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Authors

¹Okwor, Kelvin Nick

²Nnado Ifeanyi Celestine  

³Odenigbo, Chinenyeze Bonaventure

⁴Ugwuta, Emeka Emmanuel 

⁵Iloha, Eucharia Ijeoma

^{1,2,3,4 &5}Department of Accountancy, Enugu State University of Science and Technology, Enugu

²Corresponding Author & email addresses: [email protected]; +2348038113063 

ABSTRACT

The study examined the association between growth indices and market capitalization of deposit money banks (DMBs) in Nigeria. The specific objectives of the study is to ascertain the relationship amid  total deposit growth, total asset growth, liquidity, profit growth and share price of DMBs in Nigeria. The study period spanned 10 years (2013-2022) and purposively sampled 8 out of the 23 DMBs. Spearman’s Rank Order covariance technique was used to test the hypotheses. Results revealed that both total deposit growth and total asset growth exerted weak and positive relationships with share prices (correlation coefficients (cc): 0.2031 and 0.1366 respectively), while profit growth exerted a weak but negative relationship with share prices (cc: -0.1792). It portrayed the existence of diverse factors influencing share price movements. However, share prices are also affected by investors’ sentiments, macro trends, and so on. Unexpectedly, a weak negative association between profit growth and share price showed that profit growth alone does not guarantee higher share prices. Share prices react to such factors as macro conditions, financial health, sentiment and investor expectations. That is, while growth indices play a key role, other variables significantly influence the outcomes. It advised DMBs to prioritize maintaining deposit growth while diversifying efforts to enhance other financial aspects such as comprehensive financial management. 

Keywords: Growth indices, outstanding shares, Profits, DMBs.

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