EFFECT OF FIRM CHARACTERISTICS ON FIRM VALUE OF LISTED DEPOSIT MONEY BANKS IN SUB-SAHARAN AFRICA

Abstract

The study examined the effect of firm characteristics (namely firm size, profitability and leverage liquidity) on the firm value of listed deposit money banks in Sub-Saharan Africa. A quantitative research design was adopted for the study. Secondary data were gathered from annual financial reports and other relevant disclosures covering the period from 2015 to 2024, with emphasis on banks publicly listed on stock exchanges across Sub-Saharan Africa. The study employed purposive sampling to select banks that met specific inclusion criteria, thereby ensuring the availability of reliable financial data for comprehensive analysis. The population of the study comprised 229 listed deposit money banks in Sub-Saharan Africa, from which a final sample of 141 banks was selected. Descriptive statistics, correlation analysis, and robust pooled regression techniques were employed to analyze the data, with heteroskedasticity-adjusted standard errors used to ensure reliable statistical inference. The findings revealed that firm size and profitability had positive and statistically significant effects on firm value, whereas leverage and liquidity exhibited statistically insignificant effects. The study concluded that the market valuation of deposit money banks in Sub- Saharan Africa was primarily driven by scale efficiency and sustainable profitability rather than by leverage or liquidity positions beyond regulatory thresholds. Based on these findings, the study recommended that bank management prioritize efficient asset growth and profitability enhancement strategies, while regulators continue to enforce prudential guidelines that support financial stability without encouraging excessive liquidity hoarding or leverage-driven value creation.

Keywords: Firm value, Firm size, Profitability, Liquidity, and Leverage.