Abolition of universal banking model in Nigeria; A policy somersault?
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Faculty of Management Sciences, University of Ilorin
The Central Bank of Nigeria (CBN) abolished universal banking model in Nigeria in 2010 barely ten years of its introduction. This abolition generated a lot of debated as some economists argued that the gains of past reforms, especially adoption of the banking model, had not been fully realised and, therefore, tagged its reversal a "policy somersault". Therefore, this study assessed empirically the performance of Deposit Money Banks in Nigeria before and after the abolition of the model. Data were collected from annual reports of the selected banks listed on the Nigerian Stock Exchange (NSE) and the data were analysed using both descriptive and inferential statistics. One-way ANOVA was used to test the stated hypotheses. Results of the analysis indicate that abolition of universal banking does not have significant effect on ROA, ROE and EPS of Deposit Money Banks in Nigeria. The study concludes that in terms of banks profitability, reversal of universal banking model might actually be policy somersault. It is, however, recommended that further studies be conducted on costs of universal banking and how the abolition affects such cost as conflicts of interest and risk exposure. This is because the findings of this study may not be generalised on all areas of universal banking model.
Universal, Banking, Synergy, Profitability, Reforms, Nigeria