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Corporate Income Tax and Financial Performance of Deposit Money Banks in Nigeria

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  • Onwughai, Emelenjor Austin

    (Department of Accountingfaculty of Management Sciences veritas University, Abuja Nigeria)

  • Prof. Musa J. Success

    (Department of Accountingfaculty of Management Sciences veritas University, Abuja Nigeria)

  • Prof. Mathias Ofili

    (Department of Accountingfaculty of Management Sciences veritas University, Abuja Nigeria)

Abstract

This study examines the effect of Company Income Tax (CIT) on the financial performance (ROA) of listed deposit money banks in Nigeria, with a particular focus on the moderating role of Firm Size in the CIT-ROA relationship. The study population comprises all 43 deposit money banks as published on the Central Bank of Nigeria’s website as at April 26, 2024. A sample of twelve banks was selected using a purposive sampling technique. The study covers a fifteen-year period from 2009 to 2023, utilizing secondary data extracted from the audited financial statements of the selected banks. Employing ex-post facto research design, pooled regression was used for the analysis. The findings reveal a statistically positive but insignificant relationship between CIT and ROA. However, with moderation, the CIT-ROA relationship was found to be negative and significant. The study recommends banks should adopt effective tax planning by leveraging incentives and deductions while ensuring compliance. This will help enhance profitability and improve ROA without risking regulatory penalties. Policymakers should review tax policies for larger banks, as CIT negatively impacts their financial performance. Introducing tiered tax rates or industry-specific incentives can promote growth and stability.

Suggested Citation

  • Onwughai, Emelenjor Austin & Prof. Musa J. Success & Prof. Mathias Ofili, 2025. "Corporate Income Tax and Financial Performance of Deposit Money Banks in Nigeria," International Journal of Research and Innovation in Social Science, International Journal of Research and Innovation in Social Science (IJRISS), vol. 9(4), pages 1662-1676, April.
    • Handle: RePEc:bcp:journl:v:9:y:2025:issue-4:p:1662-1676
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    References listed on IDEAS

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