Determinants of Bank Profitability: Industry-Level Evidence from Nigeria

International Journal of Nigerian Studies and Development, Vol. 14, pp. 21-34, 2008

30 Pages Posted: 24 Jun 2008 Last revised: 11 May 2009

Date Written: May 16, 2008

Abstract

Banking sector reforms have been introduced in Nigeria to ensure inter alia a strong and reliable banking sector. However, if the historical antecedents of financial sector reforms in Nigeria are anything to go by, the recent reforms may not help to improve bank profitability and stability. Hence, to contribute to the existing knowledge of bank profitability in Nigeria, this study sought to identify significant industry-level determinants of bank profitability in the country. Using a panel data set comprising 1153 observations of 138 banks over the 1980-2007 period and industry-level indices over the same period, regression results indicate that competition level in the Nigerian banking industry and the degree of foreign ownership of the industry have negative relationships with the profitability of banks operating in Nigeria.

Keywords: Bank Profitability, Concentration, Competition, Entry, Expansion, Ownership

JEL Classification: G21

Suggested Citation

Aburime, Toni, Determinants of Bank Profitability: Industry-Level Evidence from Nigeria (May 16, 2008). International Journal of Nigerian Studies and Development, Vol. 14, pp. 21-34, 2008, Available at SSRN: https://ssrn.com/abstract=1120232

Toni Aburime (Contact Author)

Deakin University ( email )

221 Burwood Highway
Burwood, Victoria 3125
Australia
+61 4 20635563 (Phone)

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