BANK CONSOLIDATION AND THE GROWTH OF NIGERIAN BANKING INDUSTRY

Author: ONWUZULUIKE, Rebecca Nonye

Abstract

This research work examines Bank Consolidation and the Growth of Nigerian Banking Industry. The objective of the study is to ascertain the effect of bank consolidation on banking industry. For this purpose, we made use of books from various authors and internet materials were consulted as well for the review of related literature. we gathered secondary data from the CBN Annual Reports for the period 2004 to 2013. We analyzed our data using regression analysis through the Statistical Package for Social Sciences (SPSS) statistical software. Having conducted the test, we discovered that bank consolidation does affect the growth of banks in Nigeria. Specifically, results show that there is no significant relationship between bank capitalization and bank total assets, that the level of banks aggregate credit has significant impact on banks growth in Nigeria, while the level of banks loans and advances has no significant impact on the growth of banks in Nigeria. We recommend the need for a radical overhauling and reorganization of the existing conditions for loans and advances of Nigerian banks in order to make them more effective catalyst of growth and development. We also recommend the need for the monetary authority to introduce proactive and tight supervisory policy to ensure sound, strong and safe financial institutions needed to re-enforce confidence on all stakeholders in the banking system and to boost profitability, banks should diversify their investment with more of it on long-term basis and as well integrate the informal financial services sector through effective intermediation process to increase the growth of Nigeria economy. Finally, Policy framework and initiatives should be strengthened in the areas of quality bank management, supervision and control by the Central Bank of Nigeria and the Federal Government to ensure consistency in policy objectives and instruments through good implementation strategy to boost growth in the banking industry.

Supervisor; Prof. E.L. Dabor