Al-Hikmah University Journal

Debt financing is a method of raising funds for a business by borrowing money from external sources such as banks, financial institutions and bond markets. The study investigated the effect of debt financing and financial stability of listed deposit money banks in Nigeria. The study employed the ex post facto research design. The population was 24 deposit money banks in Nigeria listed on the Nigeria Exchange Group (NGX) as of 31st December 2022. 10 banks were used as the sample size. A purposive and convenient sampling technique was used. Data were obtained from the annual published reports of the sampled banks for a period of 10 years (2012-2021). Descriptive and inferential statistics were used to analyse the data. The study found that debt financing measures had a significant and positive effect on net profit margin and The study found that debt financing measures had a significant and positive effect on return on investment. The study concluded that debt financing measures affected the financial stability of listed deposit money banks in Nigeria. It is recommended that the management of listed deposit money banks in Nigeria should work assiduously to have optimal capital structure for their companies to increase their return on investment.