Effect of Bank Holding Company Structure on Farmers’ Financial Welfare in Nigeria

Ifeanyieze F O,Ugwoke O E,Mgbenka` R N,Ugwu O C,Ekwueme U S,Okwo C R,Isiwu E,Nwankwo C U,Ekenta L U,Onah F C,Nwachukwu C U,Asogwa Cosmas I,Onah Ogechukwu

doi:10.32861/jssr.512.1723.1733

Abstract

This study examines the impact of bank holding structure on the financial welfare of farmers. We used an expost facto research design and studied all the 18 deposit money banks in Nigeria. We used dummy variable to measure bank conglomerate structure for the period between 2001 and 2018. We also identified the features of financial holding companies based on firms’ specific variables including portfolio condition, competitive standing, equity characteristics and sizes. Based on our analysis, bank holding structures significantly and positively affect banks’ propensity to create risk assets to farmers (coefficient=0.34; p-value less 5%). This implies that ring fencing banks leads to increase in credit availability to farmers and consequently their welfare advancement in Nigeria. Banks with holding structure have competitive advantage and this competiveness benefits farmers significantly (coefficient=0.05; p-value < 0.05). Our analysis also shows that banks with holding structures diversify into non-interest source of revenue, which yields positive and significant effect on farmers’ financial welfare (coefficient= 2.05). Thus, diversifying conglomerating banks can outperform their peers in terms of risk asset making for farmers to extent that relative to non conglomerate banks, up to 2.05% of credit is allocated to farmers for every unit change in bank market due to holding structures. Variation in deposit demands, and gross assets were found to advance loans to farmers. However, default risks and liquidity risk of conglomerate banks limits their credit availability to farmers, which implies that conglomerate banks are highly sensitive to liquidity and default risks. We also found that conglomerate banks allocates risks asset to farmers based on the national economic growth level. Thus, as the economy improves conglomerate banks’ desire to make risk assets to farmers also increases. We recommend that regulators should improve economic growth in order to draw banks into lending to farmers. Conglomerate banks should be protected from default shocks and liquidity risks in order to encourage them to lend more to farmers.

Highlights

A common characteristic of most societies is the existence of dominant and co-culture
The null hypothesis of no significant relationship between the two variables is not accepted. This implies that there is a significant relationship between the two variables at a 5% significance level
We focus on Group Deprivation and cultural identity-based social exclusion

Summary

Introduction

A common characteristic of most societies is the existence of dominant and co-culture. The dominant culture in most cases usually belongs to the majority group while the co-culture to the minority. Minority ethnic group exhibit certain distinguishing characteristics which differ from the dominant group. These characteristics could be in terms of colour, race, religion, cultural practices and beliefs systems. The 13 clans differ from the Omodo clan on the basis of ancestral and migratory historical factors. It is on the basis of these factors that the cultural identity of the two groups was established. Within the context of this research, social exclusion on the basis of cultural identity, the Omodo group suffers residential segregation and exclusion from the dominant cultural practices

Methods

Discussion

Conclusion