Banking Consolidation in Nigeria, 2000–2010

Barros, Carlos Pestana; Caporale, Guglielmo Maria

doi:10.1080/15228916.2012.727756

Cited by 12 publications

(13 citation statements)

References 71 publications

(60 reference statements)

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“…In 2013, profitability decreased by 2%, which shows evidence of market congestion. Consolidation was adopted in 1970 in Nigeria (Barros and Caporale, ).…”

Section: Resultsmentioning

confidence: 99%

“…The general conclusion is that Angolan banks are efficient and relatively homogeneous, yet face difficult problems (Barros and Caporale, ). The major policy implication of this study is that common policies are suitable for this relatively homogeneous banking market and benchmarking studies should be adopted on a regular basis to observe the evolution of Angolan banks over time.…”

Section: Conclusion and Discussionmentioning

confidence: 99%

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A Bayesian Efficiency Analysis of Angolan Banks

Barros

Leão

Macanda

et al. 2016

South African J Economics

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This article studied the technical efficiency of Angolan banks from 2005 to 2012 using a Bayesian stochastic frontier model. The intermediation approach to banking was adopted. The results revealed that Angolan banks were very efficient and that efficiency varies little among the banks analysed. Furthermore, the differences in efficiency between foreign banks, public banks, large‐sized banks and banks that belong to a local conglomerate were examined. It was concluded that the greatest efficiency was to be found in the case of foreign banks. Since size and conglomerate membership do not seem to lead to greater bank efficiency, it was proposed that Angolan policymakers should promote competition in the banking sector.

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“…In 2013, profitability decreased by 2%, which shows evidence of market congestion. Consolidation was adopted in 1970 in Nigeria (Barros and Caporale, ).…”

Section: Resultsmentioning

confidence: 99%

Section: Conclusion and Discussionmentioning

confidence: 99%

A Bayesian Efficiency Analysis of Angolan Banks

Barros

Leão

Macanda

et al. 2016

South African J Economics

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“…The quest for maximum result within a minimum time led to the use of young staff (females in particular) as marketers to get customers to deposit money and promotion depended on the number (calculability) one attracts (Dumbili, 2013). As these processes yielded some positive results such as cost-efficiency (see Barros & Caporale, 2012), they also came with the irrationalities that often accompany any McDonaldized business (Ritzer, 2000). Some of the irrationalities are as follows: the increasing spending by customers due to multiple bank charges, myriad of techno-based crimes in the sector, job insecurities, and so on (Dumbili, 2013).…”

Section: Evidence Of the Mcdonaldization Process Of Nigerian Banksmentioning

confidence: 99%

McDonaldization and Job Insecurity

Dumbili

2013

Sage Open

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The article examines how and why the McDonaldization of banking system in Nigeria engenders job insecurity. This is imperative because it provides an explicit revelation of the root causes of job insecurity in the sector that other scholars have totally omitted. No Nigerian scholar has applied the thesis in relation to job insecurity, which is the major problem in Nigeria's banking industry. The article based on the analysis of secondary data and observations, therefore, draws on McDonaldization thesis to examine the upsurge of rationalization in the sector since consolidation exercise began in 2005. The article argues that the sector's rising rationalization and ensuing efficiency, calculability, predictability, and control are necessary. However, these have inevitably engendered job insecurity and its adverse consequences. Based on the critical analyses of available evidence, the article concludes that the best option is to commence resistance of the McDonaldization processes, especially those that replace human with nonhuman technology or make customers unpaid workers.

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“…To find out if Nigeria's banking sector has benefitted from consolidation through reduced costs and improved competition, Barros and Caporale (2012) developed a generalized method of moments (GMM) model. Using dynamic panel data for the period 2000 -2010, they found that the sector has benefitted from the consolidation process and specifically that foreign ownership, mergers and acquisitions and bank size decreased costs.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The results they obtained seem to support the official position that M&A in the banking industry had promoted sustained competition and higher efficiency levels, resulting in a minimal reduction of interest rate spread. While the approach adopted by Okafor et al (2012) was robust, utilizing the strengths of the Herfindahl-Hirscman index, the model developed by Barros and Caporale (2012) had the capacity of allowing for dynamics in the dependent variable because of the inbuilt and plausible empirical assumption that the best performing banks were likely to remain so in the subsequently years. However, the two models were not specifically developed to estimate the impacts of M&A on the selected banks' operating/financial performance, as their main focus was on the bigger picture -competition and efficiency.…”

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confidence: 99%

Isolating the ‘Pure’ Effect of the 2004/2005 Bank Consolidation Policy on Performance of Banks in Nigeria, Using the Chow Test (2000-2010)

Umaru

2013

AFR

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A cursory review of existing impact study literature of 2004/2005 Nigerian bank consolidation, of which mergers and acquisitions were the main policy thrust, revealed that most studies concluded that the policy has had a tractable and significant impact on bank intermediation, deposits mobilization and management of loans and advances as well as bank performance. However, a critical analysis of the literature showed that majority of existing studies were neither founded on a sound theoretical premise nor their models sophisticated enough to distil the 'real' licy from the superficial and added-up effect of pooling capital bases, deposits, credit balances and book profits of several banks. To overcome the observed shortcomings, full estimated generalized least-square (FEGLS) and fixed effect-least-squares dummy variable (LSDV) models were developed. A panel data consisting of 11-year time series data, covering six stratified randomly selected consolidated banks in Nigeria was used in the study. While FEGLS was designed to isolate the 'pure' impact of the policy on bank performance using the Chow test procedure, the LSDV model was deployed to test the hypothesis that the overall impact was not evenly spread across banks. The results of the empirical estimation seem to cast doubt on the validity of the general conclusion of past studies -that the policy has had 'real' and significant impact on bank intermediation, portfolio management and performance. The study observed that this conclusion probably due to the short-term nature of the period covered by most of the studies and recommended the use robust methodologies by subsequent research on the subject.Keywords: Bank consolidation, Intermediation, Chow test, Mergers and acquisitions, Nigeria IntroductionAs part of the overall banking reform intended to foster a comprehensive and healthy financial system to support economic development and avoid systemic distress, the Central Bank of Nigeria (CBN) in July 2004 directed all banks to shore up their minimum paid up capital from two to 25 billion of Naira before the end of December 2005. In particular, banks were encouraged to explore all possible options, including merger and acquisition. By the end of the exercise, the number of banks in operation reduced from 89 to just 25.Eight years after, another round of banking reforms is well under way. As expressed in the Financial System Strategy 2020 (FSS2020), this reform is intended to not only consolidate the gains of the previous reform but to reposition the sector to a play a leading role in repositioning Nigeria as one of the top twenty economies in the world by the year 2020. However, the question is what are these gains that the new reform purports to build upon? Has the 2004/2005 bank reform recorded any meaningful impact on bank operation especially in terms of bank efficiency, shareholders' wealth and the real sector of the economy, in the first place? Indeed, there have been a number of attempts to provide an answer to this question in the past few years...

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Banking Consolidation in Nigeria, 2000–2010

Cited by 12 publications

References 71 publications

A Bayesian Efficiency Analysis of Angolan Banks

A Bayesian Efficiency Analysis of Angolan Banks

McDonaldization and Job Insecurity

Isolating the ‘Pure’ Effect of the 2004/2005 Bank Consolidation Policy on Performance of Banks in Nigeria, Using the Chow Test (2000-2010)

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