Does Bank size Contribute to Bank Earnings Volatility? Empirical Evidence from Nigeria

The study empirically investigated the impact of bank size on bank earnings volatility in 14 Nigerian banks with a panel data set spanning the years 2010 to 2020. The fixed effect model of Driscoll and Kraay was used, which accounted for serial correlation, heteroskedasticity, and cross-sectional dependency. Empirical results reveal that bank size and loan to asset ratio significantly influence bank earnings volatility in the sample Nigerian commercial banks. The market population variable was seen to have a negative but insignificant impact on bank earnings volatility. Also, the insignificance of the bank size squared reveals that this effect is linear. Additionally, this demonstrates that bank size does not always imply earnings stability. Policy implications of the findings are discussed.