EFFECT OF OWNERSHIP CONCENTRATION ON NON-PERFORMING LOANS OF DEPOSIT MONEY BANKS IN NIGERIA

Abstract

Despite the great lessons gained from extant studies coupled with the several measures adopted by the CBN to curb the rising position of NPLs, bad loans have continued to increase causing serious financial crises and bank distress. This study investigates the effect of ownership concentration on Non-Performing loans of deposit money banks in Nigeria. The study used ex-post facto research design. The population of this study comprises all the 14 quoted deposit money banks in Nigeria. Eight (8) deposit money banks licensed with international authorities were used as a sample size. Data was collected from the annual financial reports and accounts of the sampled deposit money banks, the Central Bank of Nigeria and the Nigerian Exchange Group. Descriptive statistics, correlation test and Panel regression were used for analysis and the findings showed that ownership concentration (OC) has a negative and significant effect on non-performing loans of deposit money banks in Nigeria. Other findings showed that bank size has a positive and insignificant effect on non-performing loans of deposit money banks in Nigeria. The study recommended that the Central Bank of Nigeria should invigorate its supervisory role while reviewing corporate governance policies on ownership concentration to limit the growth of nonperforming assets to the barest minimum. This will also minimize the chances of allowing incompetent investors to control the affairs of banks while creating a more conducive atmosphere to attract foreign investors who possess firm-specific advantages to boost performance and limit the growth of bad loans in the banking sector.