Volume : 8, Issue : 2, FEB 2022

EFFECTS OF FINANCIAL REFORMS ON EFFICIENCY OF DEPOSIT MONEY BANKS IN NIGERIA

ABIOLA IDOWU, OYETOYAN SAMUEL ADEBAYO

Abstract

Financial reforms were meant to remove the intrinsic limitation and disintegration of the financial system, and strengthening the key financial intermediation and deepening which propel banks for structural and financial efficiency. This study is then intended at empirically investigate how financial restructuring and financial intermediation influence the efficiency of Deposit Money Banks (DMBs) in Nigeria. Ten deposit money banks were surveyed which constitute the old and new generations in Nigerian banking industry. Secondary data were collected and analysis was done with the use of SPSS. The study is both qualitative and quantitative in nature. In the hypothesis formulated graphical illustration was used to measure bank performance, The finding reveals that there were key financial deepening indices affecting structure-conduct-efficiency of monetary policy target of DMBs between 2001-2018 in Nigeria. The result concluded that financial deepening indices should not be separate from financial reforms so as to facilitate the flow of funds for private sector development and generates increased savings, investment, and efficient allocation of capital for banks. It is hereby recommended that unethical practices like debt refinancing should be avoided by banks so that macroeconomic variables which include controllable and uncontrollable factors, such as financial deepening/M2 effect, Illiquidity could be well managed.

Keywords

FINANCIAL DEEPENING RESTRUCTURING INTERMEDIATION EFFICIENCY.

Article : Download PDF

Cite This Article

Article No : 6

Number of Downloads : 94

References

  1. Abiodun E.A. & Orianwote V.E (2014), Empirical Assessment of Banking Sector Reform and Unemployment in Nigeria: International Journal of Humanities and Technology, Published 2014, Corpus ID: 154995700. 2(1), 1-15
  2. Adegbaju, A.A. and Olokoyo, F.O. (2008). Recapitalization and Banks performance: A Case Study of Nigerian Banks. African Economic and Business Review. Case Study of Nigerian Banks. Africa., 6(1): 1-16.
  3. Adegbite, O.E. (2005). Financial Sector Reforms and Economic Development in Nigeria: The Role of Management. Being a Paper Delivered at the Inaugural National Conference of the Academy of Management: Key to National Development. November 22 - 23, At Rockview Hotel, Abuja.
  4. AIA Annual Report (2010). [Retrieved October 20, 2011]. Available at:

http://media.corporate-ir.net/Media_Files/IROL/23/238804/AIA_2010Annual_ Report_End_Final.pdf

  1. Anderibom, A. S & Obute, C. O. (2015). The effects of mergers and acquisitions on the performance of commercial banks in Nigeria: Evidenced from United Bank for Africa Plc. International Journal of Education and Research, 3(4), 93-112. Available at: http://www.ijern.com/journal/2015/April2015/10.pdf (Accessed: 19 January 2020)
  2. BIS (2008). Principles for sound liquidity risk management and supervision. Bank for International Settlement. 13(5), 100-113
  3. CBN (2004), Guidelines and Incentives on Consolidation in the Nigerian Banking Industry, Published by the Central Bank of Nigeria. 2(4), 15-21
  4. CBN 2018, “Annual Reports and Statement of Accounts” A Publication of Central Bank of Nigeria Garki Abuja. 3(2), 11-19
  5. CBN 2018, “Statistical Bulletin Financial Sector Accounts” A Publication of Central Bank of Nigeria Garki Abuja. 1(1), 30-33
  6. CBN, (2005), “Statistical Bulletin (16) Bank” A Publication of Central Bank of Nigeria Garki Abuja. Central Bank of Nigeria (1993), “Perspectives of Economic Policy Reforms in Nigeria”. A Publication of Central Bank of Nigeria Garki Abuja.
  7. CBN, (2012), Liquidity Management by the CBN - Central Bank of Nigeria;
  8. CBN. (2019). Uncertainties in the global financial, economic and political environment. Central Bank of Nigeria Communiqué no. 124 of the monetary policy committee meeting of Monday 20th and Tuesday 21st May, 2019, with personal statements of members. Abuja
  9. Central Bank of Nigeria (2004). Post Consolidation and the Journey so far. Guardian Newspaper. Wednesday February. 20th June.
  10. Central Bank of Nigeria (2011), Monetary Policy Reform, Abuja, CBN Press.
  11. Fagge A. (2019). Comparative analysis of technical, allocative and cost efficiency of Nigerian deposit money banks: Data Envelopment Analysis. African Development Review Vol 57. No 1, 17-25
  12. Gujarati D N. (2004): Basic Econometrics, 4th ed. McGraw-Hill Companies.
  13. Gujarati, D. N. and Porter, D. C. (2009) Basic Econometrics Boston, McGrawHill Company
  14. Idahosa, O.I., (2000); “The Experience of Banking Supervision in Financial Sector Surveillance”, Central Bank of Nigeria Bullion, Vol. 28, No.1, Pp. 49-53. Lagos: Central Bank of Nigeria.
  15. Imala O.I (2005) Challenges of banking sector reforms and bank consolidation in Nigeria, Bullion. 29(2), 26-36
  16. Inang, E.E. & Upkong, G.E. (1992). A Review of Small-Scale Enterprises Credit Delivery Strategies in Nigeria. Economic and Financial Review. 30(4): 67 – 68.
  17. John H. B, Ross L and Bruce D. S. (2000). The Impact of Inflation on Financial Sector Performance, Journal of Business and Management Sciences, Vol. 3, No. 4.
  18. Kama, U. (2006). Recent Reforms in Nigerian Banking Industry: Issues and Challenges. CBN Bullion, 30 (3): 65-74.
  19. Kolade, S. (2013). A comparative Performance Evaluation of the Nigerian Banking Sector in the post-2005 consolidation: Through the Camel Rating System. International Journal of Business and Social Science vol. 3 (13), July 2012
  20. Lucky E.U. and Bruno O.S (2018).Baanking sector reform and the performance of banking business in Nigeria: An econometric analysis. International Journal of Business and Management Review, vol 6, NO.6, PP. 40-45
  21. Mayowa G. (2018). Liquidity management and profitability of deposit money banks in Nigeria. Online publication by University of Benin Press, Department of Banking and Finance, Retrieved from ajao.mayowa@uniben.edu; mayourwah@yahoo.com
  22. Musaed S; ALAli, O. (2020); Liquidity Management and Banks Financial Performance in Kuwait. Financial Markets, Institutions and Risks, Volume 4, Issue 3, ISSN (Online) – 2521-1242 -2521-1250; Retrieved on 23-2-2020
  23. NDIC (2018). Financial Condition and Performance of Deposit Money Banks for Q1 and Q2. Publication by Research, Policy & International Relations, and Insurance & Surveillance Department, NDIC Quarterly Journal Vol. 33, No 1 & 2
  24. NDIC, (2004), Annual Reports, Nigeria Deposit Insurance Corporation, Abuja NDIC, Annual Reports, various editions, Nigeria Deposit Insurance Corporation, Abuja.
  25. NDIC. (2018). Serving the agricultural sector through microfinance banking. Fourth Annual Symposium. Abuja.
  26. Ndoka, S., Islami, M., & Shima, J. (2017). The impact of liquidity risk management on the performance of Albanian Commercial Banks during the period 2005–2015. International Journal of Social Sciences and Education Research, 3(1), 70-76. https://doi. org/10.24289/ijsser.283588.Access on 15-10-2010
  27. Obim, E. N., Takon, S. M. & Mgado, M. U. (2020); The Impact of Liquidity on Banks Profitability in \nigeria; IIARD International Journal of \banking and Finance Research E- ISSN 2695-186x P-ISSN 2672-4979, Vol6. No. 1; www.iiardpub.org
  28. Ojo, M.O. (1992). Regulatory Framework of Non-Bank Financial Institutions in Nigeria. Bullion,16(3). 45-53
  29. Olokoyo F.O & Umoren A.O, (2007). ‘Mergers and acquisition in Nigeria: Analysis of performance pre-and-post consolidation’. Lagos Journal of Banking, Finance and Economic Issues. Vol I, No. I, July 2007.
  30. Olokoyo F.O. (2013). Bank Reforms and Performance of Banks in Nigeria. International Journal of Education and Research Vol. 1 No. 9 September 2013. Email: felicitymy79@gmail.com, felicia.olokoyo@covenantuniversity.edu.ng
  31. Olokoyo F.O. (2013). Capital Structure and Corporate Performance of Nigerian Quoted Firms: a panel data approach. Journal of African Development Review. Vol 23,No 1, 2013, 30-48
  32. Owolabi, S. A & Odida, S. S (2012) Liquidity Management and Corporate Profitability: Case study of selected manufacturing companies listed on the Nigerian Stock Exchange. Business Management Dynamics. Vol.2, No.2, pp.10-25.
  33. Saleem Q.,and Rehman R. (2011). Impacts of liquidity Ratios on Profitability (Case of Oil and Gas Companies of Pakistan). Interdisciplinary Journal of Research in Business, 7(1), 15-28
  34. Sanni, M., (2009).Short Term Effect of the 2006 Consolidation on Profitability of Nigerian Banks. A publication by the Institute of Chartered Accountants of Nigeria, 1 (1), 107-119.
  35. Sanusi, L. S (2010). The Nigerian Banking Industry, What Went Wrong Between 2008 B 2009". A Lecture Delivered at Bayero University, Kano.
  36. Sanusi, L.S., (2012). ‘Banking Reform and its Impact on the Nigerian Economy’. Being a lecture delivered at the University of Warwick Economic Summit.
  37. Sanusi, L.S., (2012): Banks in Nigeria and national economic development – a critical review, at the seminar on “Becoming an economic driver while applying banking regulations”, organized by the Canadian High Commission in joint collaboration with the Chartered Institute of Bankers of Nigeria (CIBN) and the Royal Bank of Canada (RBC), Lagos, 7 March 2011.
  38. Sobowale, D (2004). Soludo’s Revolution and N25 billion Capital Base Policy, The Grave Danger Ahead; Mergers, Acquisitions and Recapitalization Options, How Feasible. Weekend Vanguard, July 4, pp. 23-40
  39. Soludo, C. (2004). Consolidating the Nigerian Banking Industry to Meet the Development Challenges of the 21st Century. Being an Address Delivered to the Special Meeting of the Banking Committee.  Held on July 6, 2004 at CBN Headquarters, Abuja.
  40. Soludo, C. (2005) The imperative of bank sector reforms in Nigeria. Being paper presented at the inauguration of the consultative committee on Banking Sector consolidation (online). Available at www.cenbank.org, accessed 2 April, 2020.
  41. Soludo, C. (2009) Global Financial and economic crisis: How vulnerable is Nigeria? CBN monthly publication (online). Available at www.cenbank,org, accessed 25th May, 2019.
  42. Soludo, C. (2009). Banking in Nigeria at a Time of Global Financial Crisis. Being Presentation at the Special Interactive Session on the Banking System at the Eko Hotel and Suites, Victoria Island, Lagos 30th March.
  43. Umoh PN (2004). Capital Restructuring of Banks: Conceptual Framework. Conference Proceedings on Consolidation of Nigeria’s Banking Industry, Central Bank of Nigeria, Abuja.
  44. Walter CN, Uche U (2005). New Capitalization for Banks: Implication for the Nigerian Economy. Adamawa State University. Business. Journal., 1(1), January.34-45
  45. Wuava T., Yua H., and Yua P.M., (2020) effect of liquidity management on the financial performance of banks in Nigeria; European Journal of business and innovation research Vol , (4) pp30-44; ECRTD UK print ISSN;2053-4019 www.cenbank.org/out/EducSeris