Impact of Ownership Structure on Bank Profitability in Nigeria
Journal of Global Economy, 2008, vol. 4, issue 3, 170-183
Ownership structure is considered an important factor that affects a firm’s health. If ownership structure affects a firm’s health, it is possible then to use the ownership structure to predict firm profitability. Against this backdrop, this paper analyzes the relationship between ownership structure and bank profitability in Nigeria. There are two motivations for this paper. Firstly, midway into the banks consolidation exercise in Nigeria, the CBN identified the need for a determination of the most appropriate composition of bank capitalization that would enhance the individual and systemic profitability and efficiency of banks in Nigeria post-consolidation. Hence, it decided to minimize state governments’ investment in banks during the exercise and also issued a December 2007 ultimatum to all tiers of governments that have stakes in banks to dilute their investments to a maximum of 10 per cent. Unfortunately, the CBN did not state any econometrically-based rationale giving credence to its directives. Secondly, the effect of ownership structure and concentration on a firm’s performance is an important issue in the literature of finance theory. However, no researcher has studied this important aspect of finance theory in the Nigerian context. It is worth noting that most research on ownership structure and firm performance has been dominated by studies conducted in developed countries. However, there is an increasing awareness that theories originating from developed countries such as the USA and the UK may have limited applicability to emerging markets. Emerging markets have different characteristics such as different political, economic and institutional conditions, which limit the application of developed markets’ empirical models.
Keywords: Nigerian Economy; Banking Sector; Ownership Structure; Bank profitability (search for similar items in EconPapers)
JEL-codes: G21 M2 (search for similar items in EconPapers)
References: Add references at CitEc
Citations: View citations in EconPapers (1) Track citations by RSS feed
Downloads: (external link)
Not freely downloadable
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:jge:journl:431
Ordering information: This journal article can be ordered from
Access Statistics for this article
Journal of Global Economy is currently edited by Dr J K SACHDEVA
More articles in Journal of Global Economy from Research Centre for Social Sciences,Mumbai, India
Bibliographic data for series maintained by Dr J K Sachdeva ().