There are increasing scholarly debates on the direction of policy to effectively improve the performance of banks. Some scholars argue that bank performance is enhanced by improvements in the internal organization and managerial efficiency others argue that industry wide factors are integral to bank performance. In recent times, the direction of literature has shown that macroeconomic factors play a significant role in determining bank profitability. This paper investigates the determinants of bank profitability in the light of bank specific variables, industry related factors and macroeconomic influences, using a panel of selected banks that account for over 60% of total bank assets in Nigeria. Findings show that bank profitability is largely determined by credit risk and other factors that relate to the internal organization of banking firms. Market concentration is significant as a determinant of bank profitability. There is no evidence of structure-conduct-performance hypothesis, however empirical results show that there is no collusive behavior amongst banks. Exchange rate is significant as a determinant of bank profitability through return on equity and non-interest margin, but not significant to return on asset as a measure of profitability.
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