This study examines the threshold effect in the nonperforming loans–profitability nexus within the Nigerian banking industry. Using the innovative dynamic panel threshold of Seo, Kim, and Kim (2019), the work documents threshold levels of 3.5% and 5.0% of nonperforming loans for return on average assets (ROAA) and return on average equity (ROAE), respectively. These levels of nonperforming loans ensure equilibrium profitability without stability trade‐off in the industry. Similarly, the robust models suggest the threshold of 5.2% and 2.81% of impaired loans for optimal ROAA and ROAE, respectively. The results are important for policy formulations. It is recommended that the Central Bank of Nigeria (CBN) should review the 5% threshold nonperforming loans adopted in the industry in 2019 prudential guidelines to ensure stability in the Nigerian banking industry.

中文翻译：

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不良贷款与银行盈利能力之间是否存在非线性关系？来自动态面板阈值的证据

这项研究考察了尼日利亚银行业不良贷款与利润关系的门槛效应。使用Seo，Kim和Kim（2019）的创新动态面板阈值，该工作记录了平均资产收益率（ROAA）和平均资产收益率（ROAE）分别为不良贷款的3.5％和5.0％的阈值水平。这些不良贷款水平可确保均衡的获利能力，而无需在行业中进行稳定的权衡。同样，稳健模型建议最佳ROAA和ROAE的减值贷款门槛分别为5.2％和2.81％。结果对于制定政策很重要。