An Assessment of the Post Consolidation Performance of the Nigerian Banking Sector
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Date
2014-10
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Publisher
Ilorin Journal of Business and Social Sciences
Abstract
In 2005, the Central Bank of Nigeria (CBN) raised the minimum capital requirement of commercial banks in Nigeria to N25 billion in the bid to strengthen the country's financial system and insulate licensed banks from financial distress, amongst several potential benefits. This study examined how the post consolidation banks have reacted to the 2005 exercise. It specifically assessed whether there is significant difference in how the Return on Assets (ROA) and Return on Equity (ROE) of the post consolidation banks have reacted to the exercise. Secondary data was collected form published annual reports and accounts of five (5) first-tier banks from 2006-2013 (post consolidation period). Descriptive statistics and one-way Analysis of Variance (ANOVA) were employed for data analysis using the Statistical Package for Social Sciences (SPSS) Version 21.0. It was found that there is no statistically significant difference in how the ROA of the post consolidation banks have reacted to the exercise. However, a statistical significant difference exists in the ROE. To this end, it is concluded that not only is the stability of the banking sector of the economy guaranteed through the recapitalization exercise, the post consolidation banks have benefited from the exercise is similar fashion.
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Keywords
Consolidation, Return on Assets, Return on Equity, Recapitalization