Asian Journal of Economics, Finance and Management

This study examined the effect of corporate tax planning on the financial stability of listed deposit money banks in Nigeria. An ex-post facto and explanatory research design was adopted, using secondary panel data obtained from the annual reports of 10 listed deposit money banks, Nigerian Exchange Group filings, and Central Bank of Nigeria statistical bulletins for 2010–2024. Corporate tax planning was represented by capital intensity, inventory intensity, and effective tax rate, while financial stability was measured using the non-performing loans ratio, current ratio, and equity-to-total-assets ratio. The Fisher-type ADF panel unit-root tests indicated a mixed order of integration, with most variables stationary at level and selected variables stationary after first differencing. The model estimates showed that capital intensity was the principal tax-planning variable with statistically significant effects. Capital intensity had a negative relationship with the current ratio, suggesting a possible reduction in short-term liquidity as investment in fixed assets increased, but it had a positive relationship with the equity-to-total-assets ratio, indicating a possible contribution to capital strength and long-term solvency. The effective tax rate was not statistically significant across the examined financial-stability proxies. The findings suggest that tax-planning decisions should be aligned with liquidity management, capital-adequacy planning, and risk-control practices rather than treated as automatic mechanisms for improving stability. The study recommends transparent and compliant tax planning, with tax-related savings directed towards liquid assets and capital buffers.