Industry Concentration and Asset Quality as Determinate of Financial Performance: A Comparative Study of Indigenous and Foreign Owned Universal Banks

This study assessed the link between industry concentration and asset quality as key determinate of financial performance through the use of the panel regression model. The sample for the study com-prised 24 universal banks for the 2009 to 2018. It was found that, the financial performance of the indigenous banks was influenced by asset quality and moderating variables like capital adequacy, liquidity and bank size while the level of industry concentration does not influence the financial per-formance of the indigenous universal banks. The results also indicated that, the financial performance of the foreign banks is not influenced by asset quality but rather operational efficiency, liquidity, bank size and industry concentration. It is recommended that, since poor asset quality through non-performing loans adversely affect the financial performance of both indigenous and foreign banks, banks should increase their size through investment in technology to diversify the effect of asset qual-ity on financial performance.