Abstract

This study investigated the effect of financial planning and control on the financial performance of deposit money banks in Nigeria using a two-step Dynamic Generalized Method of Moments (GMM) estimator on a balanced panel of 11 banks from 2015 to 2024. Return on Assets (ROAS) was used to measure financial performance, while Debt to Equity Ratio and Cash to Deposit Ratio captured financial planning, and Non-Performing Loan Ratio and Cost to Income Ratio measured financial control. The dynamic GMM approach was adopted to address endogeneity, performance persistence, and unobserved heterogeneity, with first differenced transformation applied to refine estimation. The empirical findings from the study revealed that financial planning through leverage management significantly enhanced bank performance, as Debt to Equity Ratio exerted a positive and significant effect on ROAS. Conversely, Cash to Deposit Ratio showed a negative but insignificant influence, indicating that liquidity planning did not yield immediate profitability gains. Regarding financial control, Non-Performing Loan Ratio negatively and significantly affected ROAS, confirming that credit risk deterioration remained a critical threat to bank profitability. Cost to Income Ratio was negative but insignificant, suggesting that cost efficiency alone did not immediately translate into higher performance. The J-statistic confirmed instrument validity. The study concluded that profitability in Nigerian banks is driven largely by effective leverage planning and strong credit risk controls, while liquidity and cost management required strategic alignment to yield stronger performance benefits. The study recommended that Nigerian banks should optimize their capital structure and maintain balanced liquidity to enhance profitability, strengthen credit risk management to reduce non-performing loans, and continuously improve operational efficiency through cost control, technology, and revenue strategies.