MODERATING EFFECT OF MANAGERIAL OWNERSHIP STRUCTURE ON THE RELATIONSHIP BETWEEN ASSETS QUALITY AND FINANCIAL PERFORMANCE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA (original) (raw)
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Ownership structure and loan quality of deposit money banks in Nigeria
Journal of Islamic Accounting and Finance Research, 2021
Purpose - This study examined the effect of Ownership Structure (Management Shareholding and Ownership Concentration) on the loan quality (LDR) of banks in Nigeria for a period of 10 years (2008-2017). The study utilized data extracted from the annual reports of the fourteen (14) studied banks.Method - Robustness tests were carried out to determine: the existence or otherwise of multi-collinearity, fitness of the model and appropriate regression analysis for the study. Descriptive statistics, correlation and Fixed Effect GLS regression were used to describe and analyze the data.Result - The study found that, ownership structure (ownership concentration and management shareholding) has significant negative effect on loan quality of banks in Nigeria.Implication - The implications of this research is that increased ownership concentration as well as management shareholding can strengthen banks’ loan quality owing to reduced proportion of depositors funds used to finance loan. This coul...
International Journal of Economics and Business, 2019
The ownership structure is defined by distribution of equity with regard to votes and capital as well as the identity of equity owners. This study examined the impact of ownership structure on the financial performance of listed deposit money banks in Nigeria. Employed ordinary least squares (OLS) multiple regression technique of data analysis. The study found that Executive directors, Non-executive directors and institutional ownership have significant impact on ROA and ROE of listed deposit money banks during the period of the study. Moreover, the findings revealed that Executive directors and institutional ownership of listed deposit money banks has a significant negative impact on both ROA and ROE. Lastly, the study found that Non-executive directors’ ownership of listed deposit money banks has a significant positive impact on ROA and ROE. The study recommends that regulators of deposit money banks in Nigeria should make policies that will encourage executive and Non-executive directors’ ownership in the Nigerian banking sector. The study also recommends that the institutional investors should also be encouraged.
International Journal of Economics & Business, 2019
Abstract: The ownership structure is defined by distribution of equity with regard to votes and capital as well as the identity of equity owners. This study examined the impact of ownership structure on the financial performance of listed deposit money banks in Nigeria. Employed ordinary least squares (OLS) multiple regression technique of data analysis. The study found that Executive directors, Non-executive directors and institutional ownership have significant impact on ROA and ROE of listed deposit money banks during the period of the study. Moreover, the findings revealed that Executive directors and institutional ownership of listed deposit money banks has a significant negative impact on both ROA and ROE. Lastly, the study found that Non-executive directors’ ownership of listed deposit money banks has a significant positive impact on ROA and ROE. The study recommends that regulators of deposit money banks in Nigeria should make policies that will encourage executive and Non-executive directors’ ownership in the Nigerian banking sector. The study also recommends that the institutional investors should also be encouraged.
Journal of Emerging Economies and Islamic Research, 2019
This study seeks to establish a non-linear relationship between ownership concentration and financial performance of the listed Deposit Money Banks (DMBs) in Nigeria. The data were extracted from the annual reports and accounts of six (6) sampled DMBs from 2003 to 2014. A panel data regression technique was used to analyse the data collected. The study establishes that the relationship between ownership concentration and the financial performance of listed DMBs in Nigeria changes from negative to positive when the ownership concentration reaches 54.94%. This signifies that the relationship between ownership concentration and financial performance is negative if the concentration is below 54.94%. On the other hand, the relationship is positive if it is concentrated above 54.94%. Hence, it is recommended that the ownership of DMBs should not be concentrated below the cut-off point (54.94%) with the view to earning profits.
Journal of Accounting and Finance, 2016
The study examined the effect of corporate governance on the performance of asset quality of Deposit Money Banks (DMBs) in the post 2004 banking sector reforms. The population of study consists of the twenty four (24) deposit money banks. Time series data for the post-reform period (2006-2014) were generated from the Central Bank of Nigeria (CBN) Statistical Bulletin and annual financial reports of the various banks in Nigeria and was analyzed with descriptive and inferential statistical tools. Multiple Regression analysis was used to test the hypothesis with the aid of Eview. Jacbera test was used to test for data stationarity, while Variance Inflation Factor (VIF) and Heterosckedasticity white Test were used for data diagnosis. The findings of the study revealed that the 2004 reforms caused an improvement on Bank Asset Quality (BAQ). However the improvement is not significant at 5% level. The study consequently concludes that despite the reforms, Deposit Money Banks were still faced with post reform challenges of non-performance. The research therefore recommended that more efforts should be made to ensure adequate compliance with corporate governance provisions in improving performance. Frantic efforts should be made to improve on the huge non-performing loans and management of assets quality, which to a large extent, contribute to bank failures.
Asset Quality and Financial Performance of Deposit Money Banks in Nigeria
Lead City Journal of the Social Sciences (LCJSS), 2023
The performance of a banking institution is largely driven by its ability to increase its customers’ patronage, retain them and manage its assets and liabilities to enhance optimal returns. This can be done through banks maintaining adequate capital and quality assets for better performance. Even though banks are highly regulated and capital adequacy requirements have been in place since 1988 in Nigeria, many banks have experienced poor performance as indicated by high levels of credit risk, poor quality loans and high incidence of non-performing loans. It is thus imperative to ascertain the effect of asset quality on the financial performance of Deposit Money Banks (DMBs) in Nigeria. This study employed ordinary least square regression analysis with emphasis on fixed effect and random effect models. The findings of this research revealed that non-performing loans have a negative and not significant effect on the financial performance of DMBs in Nigeria (β = - 0.022478, P >0.05) and loan loss provisions have a negative significant effect on the financial performance of Deposit Money Banks in Nigeria (β = - 0.002954, P < 0.05). The results showed that asset quality is a key factor affecting the financial performance of Deposit money banks. It confirmed that Deposit Money Banks with good management of its loan achieve higher financial performance. So, to work properly in any economic condition the banks should have minimum or zero loan loss provision which provides financial soundness and stability.
Managerial ownership asset quality
Nasarawa State University, 2017
Across the globe, one of the after-effects of the 2008 global financial crisis was the overhauling of ownership structure of financial institutions. This was in view of the fact that many analysts confirmed peculiar challenges in the capital structure of some of the worst-hit financial institutions, particularly those within Africa. Besides, issues relating to accumulated fraudulent practices, high non performing loans and bad corporate governance ranked high amongst factors which culminated the adverse effect of the crisis. From the African perspective, this study examines the effects of ownership structure on the asset quality of deposit money banks in Nigeria in the aftermath of the global financial crisis. Specifically, the study evaluates the relationship between ownership structure variables (managerial, institutional and foreign concentration) and asset quality. The study uses a sample of fifteen (15) deposit money banks listed on the Nigerian Stock Exchange and data was gathered from Audited Annual Reports of the sampled banks for a period of nine years (2008-2016). Using System Generalized Moment Method (GMM), findings reveal managerial ownership has negative and significant effect on asset quality at 5% (p-value of 0.019) significance level, while concentrated, institutional and foreign ownership have insignificant impact on asset quality. Based on these findings, the study concludes managerial concentration of ownership of banks in Nigeria has negative consequence on asset quality; thus we recommend that management of quoted banks in Nigeria should avoid unethical practices that might affect the interest of stakeholders adversely. Such actions include insider lending and unregulated loans disbursement to cronies.
Board Structure and Asset Quality of Listed Deposit Money Banks in Nigeria
2019
Board Structure (Board Size and Board Independence) of banks is an essential ingredient for ensuring healthy financial intermediation as well as effective management of banks’ asset quality. However, the asset quality of banks in Nigeria continues to deteriorate even amidst various efforts by regulatory authorities to sanitize the Nigerian banking industry. It is on the strength of this backdrop that this study examined the impact of Board structure (Board size and Independence) on the asset quality NPL and LDR) of listed deposit money banks in Nigeria for a period of 10 years (2008-2017). Data for the study were quantitatively retrieved from the annual reports and accounts of the fifteen (15) studied banks. Various robustness tests were carried out to ascertain; the existence of multi-collinearity or otherwise, fitness of the model and to establish the appropriate regression analysis that befits the study. Descriptive statistics, correlation and OLS Robust regression were used to d...
The impact of corporate governance on the non performing loans of Nigerian Deposit Money banks
The objective of the study was to examine the impact of Corporate Governance variables of Board size(BS), Board Composition(BC), Composition of Audit Committee(CAC) and power separation(PS) on Non-performing Loans of Nigerian Deposit Money Banks; with a view to finding out whether there is significant impact or not. The researcher used secondary sources of data. The study examined the corporate governance variables amongst fourteen (14) quoted banks on Nigerian Stock Exchange from 2005-2011 using multivariate regression analysis. The findings showed that corporate governance variables of Board size, Board Composition, composition of audit committee and power separation have no significant impact on non-performing loans of Nigerian Deposit Money Banks. The study concluded that board size, board composition, composition of audit committee and power separation is not the reasons for the rising figure of non-performing loans of Nigerian Deposit Money Banks. Therefore, it is recommended that emphasis should be shifted from these explanatory variables (BS, BC, CAC and PS) to other corporate governance issues, such as insider abuse, transparency and accountability and so on, for further investigation.
Impact of Corporate Governance on Non-Performing Loans of Nigerian Deposit Money Banks
Journal of Business & Management, 2013
This study examines the impact of Corporate Governance (CG) variables of Board Size (BS), Board Composition (BC), Composition of Audit Committee (CAC) and Power Separation (PS) on Non-performing Loans of Nigerian Deposit Money Banks; with a view to finding out whether these CG variable can be useful in curtailing the incidence of non-performing loans that have bedeviled Nigerian Money Deposit Banks. Secondary data was used from fourteen (14) quoted banks on Nigerian Stock Exchange from 2005-2011. Using multivariate regression analysis, the study finds that corporate governance variables of BS, BC, CAC and PS have no significant impact on non-performing loans of Nigerian Deposit Money Banks. Hence, the study concludes that BS, BC, CAC and PS cannot be relied upon to check the rising figure of non-performing loans of Nigerian Deposit Money Banks. Therefore, we recommend that the oversight and monitoring functions of Central Bank of Nigeria should be strengthened to ensure adherence to rules and principles guiding the approval and monitoring of loans and advances.