Banking Sector Reforms and the Performance of Commercial Banks in Nigeria

Abstract

The study investigated the performance of Commercial Banks in Nigeria after Banking Sector Reforms. In order to be thorough, the performance of Commercial banks before the Reforms was also investigated. Here we analyze the relationship using Error Correction Mechanism and Chow test over the period 1970-2012. The Variables used were obtained from the banking system. The study found out that the reforms brought about some important changes in Commercial Banks Performance in Nigeria. Specifically, the level of profit (measured by NIM) continues to improve above single digit of 9.17 in 1996 to 16.18 in 2004 and a peak of 20.96 in 2011. This translates into a mean profit of 2.40 recorded in the deregulated period as against 1.54 recorded in the regulated period. Commercial Banks may improve in performance in terms of profitability, but may not really impact on the real economy at least on the short run. The study also shows that much of the benefits to commercial banks in credit creation in the economy will be derived at a price of time. A number of possible policy menu capable of bringing about a sustained Commercial Banks Performance in Nigeria in years following the study have been prescribed in the study.

Unveiling the impact of economic and political globalisation on the efficiency of microfinance institutions

“…These phenomena cause the people lose abilities in repaying the loan and direct the MFIs having problems in collecting the debts to offer new loans while meeting the loan requirements of the needy. Ekong (2016) shows congruence with this argument.…”

“…Sufian and Kamarudin (2016) stated that the economic globalisation which indicates a broad movement of products internationally, transmission of information, flow of capital and transfer of technology will increase the efficiency of MFIs. Ekong (2016), on the other hand, asserted that there is a negative correlation between economic or financial globalisation and loan distribution, where the performance of MFIs' credit management deteriorates and a rise in non-performing loans. Sufian and Kamarudin (2016) and Kurowska-Pysz et al, (2018) have noted a positive link between political globalization -the expansion in the size and complexity of political systems -and the effectiveness and performance of MFIs.…”

Bank Service Delivery in Nigeria

“…There has been poor and inconsistent bank service delivery in Nigerian banking sector over the years, and that was why a series of reforms had evolved in the sector [3,4]. However, there are variations in the quality of these banks' service delivery over the years, and this varied with the categories of banks in the country and who the assessor is (local regulator such as the Central Bank of Nigeria, Customers, and International raters such as International Monetary Fund (IMF), and World Bank [5].…”

Financial System Regulation in a Pandemic: Evidence from Nigeria

“…While, much studies had considered the efficacy of the CBN's monetary policy to ensure DMBs performance in Nigeria, and such thereof had proffered mixed conclusions, less work has investigated on other roles that the AMCON, besides its statutory debt recovery role and as an agency aligned to the CBN, could perform to further strengthen the efficacy of the CBN's policy instruments 15,21,22,23,24,25,26,27 . A proposition consequently in this light, and to address this reiterated gap in the literature, even at these times of the COVID-19 pandemic and afterwards, offers an informed opinion towards strengthening the operational effectiveness of so established policy instruments.…”