Bank loans through bank-firm relationship is expected to enhance the performance of firms owing to the possession of private information on the firms that is not readily available to other outside investors. This special relationship is deemed to be very important than equity financing in performing monitoring function on the management especially in the period of economic crisis. This study collected data for 76 non-financial firms from the Nigerian Stock Exchange between 1997 and 2007 and analyzed it with OLS, FE and GMM models to verify the impact of bank loans and ownership structure on firm productivity. The results show that bank loans and director ownership had negative impact on the efficiency of firms; however, while it was significant for the director ownership, it was insignificant for the bank loans. Hence, the result confirms the entrenchment hypothesis of the managerial ownership for the Nigerian corporate governance.