Effect of Human Capital development on the Financial Performance of Banks in Nigeria: A Study of Selected Public Quoted Commercial Banks (2005-2015)

Authors

  • Charles Emenike Ezeagba Department of Accountancy, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria

DOI:

https://doi.org/10.53555/nnbma.v2i11.88

Keywords:

Human capital, human capital development,, commercial banks, financial performance

Abstract

The main objective of this study is to determine effect of human capital development on the financial performance of banks in Nigeria. The specific objectives were to find out if there exist a significant relationship between human capital development and earnings per share , net profit margin, return on asset and return on equity of banks in Nigeria. To achieve the aim of this study, the Ex-post facto research design and secondary data were used. Data on EPS, PAT, Personnel cost, Total asset, Equity and were extracted from 2005-2015 annual financial statement of selected quoted commercial banks. Data on human capital (HCROI was the proxy used for measuring human capital) which was the independent variable, and financial performance indicators (EPS, NPM, ROA, ROE) which were the dependent variables were subjected to simple regression technique in order to analyze and establish the relationship between the variable and to test the hypotheses. The test showed that there no significant relationship between human capital development and EPS of banks in Nigeria, since p= sig= 0.350 > 0.05. However human capital was seen to have a strong positive relationship with net profit margin, return on asset , and return on equity which was 0.904, 0 .866 and 0.340 respectively as indicated by the R, which was the correlation coefficient of the two variables , also R2 which were 0.818, 0.750 and 0.115 , further revealed that human capital development accounts for 81.8%, 75% and 11.5% , contribution in Net Profit Margin , Return on asset and Return on equity of banks in Nigeria respectively, also their test showed that there was a significant relationship between human capital development and these variables since p= sig= .000 0.05 . The study shows that the importance of human resource development cannot be overemphasized in the banking industry, and that proper and adequate investments in human capital development in the banking sector will indeed bring about positive improvement in their organizational performance . Based on the findings, it was recommended that efforts should be intensified by the banking institution and the government to increase investment on Human capital, which in the long run will lead to an increase in the performance of these institution and the country at large.

References

Abiodun, E. J. (1999). Human resources management: an overview (pp. 110-121). Shomolu, Lagos: Concept Publication

Adamu, P.A. (2003).The impact of human capital formation on economic development in Nigeria: an error correction approach in human resource development in Africa. Selected papers for the year 2002 annual conference. The Nigerian Economic Society (NES), Part Two, 53-77

Adelakun, O.J. (2011). Human capital development and economic growth in Nigeria. European Journal of Business and Management, 3(9), 29-38. Retrieved from www.iiste.org

Adefila, J. J. (2008). Research methodology in behavioural sciences. Kaduna :Apani Publication

Adekass, E. (2008). Effect of training and manpower development on productivity of workers. Retrived from http://adekass.blogspot.com impact-of-motivation-on- employees.html

Aliyu, M. G., Suhal, K., &Suriyani, M.(2014). Investing in human resource development: empirical evidence from banking institutions of Malaysia and Nigeria. Journal of Economics and Sustainable Development, 5(12)

Babalola, J.B. (2003). Budget preparation and expenditure control in education, basic text in educational planning. Ibadan: Awemark Industrial Printers

Cullather, N. (2002). Development doctrine and modernization theory. Encyclopedia of American Foreign policy. Retrieved from http://www.encyclopedia.com

Danjuma, K. J., & Ajike, A. M. (2016). Human capital efficiency and corporate performance: the Nigerian perspective. The International Journal of Business & Management, 4(3). Retrieved from www.theijbm.com

Grossman, R. J. (2000). Measuring up: Appropriate metrics help human resource prove its worth. Human Resource Magazine, 45(1), 28–35

Happiness, O. O., & Michael, C.E. (2014). Impact of training a d development on organizational effectiveness: evidence from selected public sector organizations in Nigeria. European Journal of Business and Management, 6,(29)

Mcclelland, D. C. (1961). The achieving society. New York: Van Nostrand

Olaniyi, O. (2010). Rethinking government private sector relationship in Nigeria. Nigerian Journal of Economics and Social Studies, 52 (2)

Olalere, T.O., & Adenugba, A.A. (2013). Human capital development in first bank of Nigeria Plc. Mediterranean Journal of Social Sciences, 4(2), 783-801

Ongore,V. O., & Kusa,G. B. (2013). Determinants of financial performance of commercial banks in Kenya . International Journal of Economics and Financial Issues, 3(1), 237-329

Oyinlola, O. M., & Adeyemi, A. Z. (2014). An empirical analysis of human capital development and organizational performance in banking sector: a Nigerian experience. International Journal of Economics, Commerce and Management United Kingdom ,2( 7)

Onyeizugbe, C.U. (2012). Practical guide to research methodology in management. Onitsha: Africana-Feb Publishers Ltd

Prosvirkina, E. ( 2014). Human resources effectiveness in the Russian banking industry. Humanity & Social Sciences Journal, 54 (3), 11-17. doi: 10.7763/IPEDR

Pulic, A. (1997). Measuring the performance of intellectual potential in the knowledge economy. Retrieved from www.vaic-on.net

Selvarajan, T. T., Ramamoorthy, N., Flood, P. C., Guthrie, J. P., MacCurtain, S., & Liu, W. (2007). The role of human capital philosophy in promoting firm innovativeness and performance: test of a causal model. International Journal of Human Resource Management, 18(8), 1456-1470

Sowunmi, S. O., Eleyowo, I. O., Salako, M. A., & Oketokun, F. O. (2015). Human resource development as a correlate of performance of the banking industry in Ogun state, Nigeria. Journal of Economics and International Finance, 7(5), 112-126

Yesufu, T.M. (2000). The human factor in development .Nigeria, Ibadan: Spectrum Books Limited

Yusuf, I. (2013). The relationship between human capital efficiency and financial performance: an empirical investigation of quoted Nigerian banks. Research Journal of Finance andAccounting, 4(4)

Downloads

Published

30-11-2016

How to Cite

Ezeagba, C. E. (2016). Effect of Human Capital development on the Financial Performance of Banks in Nigeria: A Study of Selected Public Quoted Commercial Banks (2005-2015). Journal of Advance Research in Business, Management and Accounting (ISSN: 2456-3544), 2(11), 13-25. https://doi.org/10.53555/nnbma.v2i11.88

Similar Articles

1-10 of 113

You may also start an advanced similarity search for this article.