Effect of Human Capital Expenditure on Capital Adequacy of Banks in Nigeria

Abstract

The study investigated the effect of Human Capital Expenditure on Capital Adequacy of Deposit Money Banks in Nigeria. Its specific objectives were to determine the effects of training costs and employee benefits as human capital expenditures on capital adequacy ratios and leverage ratios of ten (10) Deposit Money Banks listed on the Nigerian Exchange Group in Nigeria within the period 2016-2021. The ex-post facto research design was adopted for the study. Relevant data was obtained from the annual reports and accounts of ten (10) Deposit Money Banks listed on the Nigerian Exchange Group in Nigeria within the period 2016-2021 as available on their websites. In testing the hypotheses, ordinary least square (OLS) model was used. The result of the study showed that human capital expenditure in terms of employee training and employee benefits have a significant effect on the capital adequacy of banks in Nigeria. The study recommends among others that, deposit money banks in Nigeria should give concerted consideration to employing more and investing more in human capital development. Regulators should issue policy guidelines to encourage deposit money banks to increase human capital expenditure.

Keywords

• Capital adequacy
• employee benefit
• employee training cost
• deposit money bank

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