The Mediating Effect of Risk Appetite on Ownership Structure and Financial Performance of Listed Deposit Money Banks in Nigeria

Abstract

ABSTRACT

This study examined the mediating effect of risk appetite on the relationship between ownership structure and financial performance of listed deposit money banks (DMBs) in Nigeria. Ownership structure was measured by managerial ownership (MSO), institutional ownership (ISO), foreign ownership (FSO) and concentrated ownership (CSO). Financial performance was proxied by Tobin's Q (TBQ). Risk appetite was measured by the non-performing loan ratio (NPLRATIO). The study employed an ex-post facto design with secondary panel data from 13 listed DMBs covering 2015–2024 (130 firm-year observations). Data were analysed using pooled OLS, fixed effects, random effects (with Hausman test) and structural equation modelling (SEM) with 5,000-replication bootstrapped indirect effects. Results show that foreign ownership has a positive and significant total effect on Tobin's Q, while managerial and concentrated ownership have negative and significant effects; institutional ownership is mixed across specifications. Risk appetite does not mediate the ownership–performance relationship: all four indirect paths are statistically insignificant. Firm size exerts a strong negative effect on performance. The study concludes that ownership structure influences market-based performance of Nigerian DMBs primarily through direct channels rather than through credit-risk appetite. Recommendations include strengthening monitoring of managerial and concentrated ownership, encouraging beneficial foreign ownership, and adopting broader risk-appetite measures in future research.