Dispersed Equity Holding and Financial Performance of Banks in Nigeria

The Nigerian banking system went through another type of reform since the completion of banking consolidation exercise in 2005, this came after a stress test which was done to ascertain the level of compliance with corporate governance code and soundness of banks in the country. Consequently, the sector witnessed another merger and acquisition, nationalization of some banks considered unhealthy and the granting of clean bill to some banks considered healthy. The directives on dispersed equity holding is an example, these healthy banks complied with. Thus, the granting of the clean bill is influenced by evidence of compliance with the code of corporate governance to some considerable extent by these banks. This only implies that, the effective operational performance of their function is tied to adherence to the code of good corporate governance practice. However, the problem is unlike operational performance, financial performance is not completely tied to adherence to the code but several other internal and external business strategies. This study has, as a major objective to study the impact of dispersed equity holding on the performance of banks considered healthy by the central bank of Nigeria. Data covering the period 2006-2010 were extracted from their financial statements. The study employed the technique of t-test with independent samples to reveal whether there was any impact of dispersed equity holding on the performance of these banks. Findings revealed an impact that is significant. Compliance with the corporate governance code as well as intensifying strategies that promotes financial performance should be further upheld.