Performance Of Banks In Nigeria Research Articles

Determinants of Bank Performance in Nigeria: Do they Behave Differently with Risk-Adjusted Returns?

Abstract The failure of banks in Nigeria has hitherto become a recurring phenomenon. Worried by the syndrome, this paper examines the determinants of bank performance in Nigeria taking into cognizance the duality of financial measures of bank performance. From an analysis of 115 bank-year observations of a sample of 17 Nigerian deposit money banks and macroeconomic data for the period 2012-2018 using Arellano-Bover one-step system GMM estimation approach, differences in the explanatory potential of these factors between the models with risk-neutral and risk-adjusted measures of performance as dependent variables are empirically established. This suggests that there is a higher probability of investors, depositors and other stakeholders being indecisive when analyzing the performance of banks. However, relying on the assumptions of risk-return hypothesis and level of risk embedded in banks’ operations could warrant them opting for determinants of risk-adjusted returns in their decision making. This study is exceptional in the bank performance literature for its long list of measures and drivers of bank performance.

Effect of Liquidity Management on the Financial Performance of Banks in Nigeria

Effect of Liquidity Management on the Financial Performance of Banks in Nigeria

Do Macroeconomic Variables Predict Deposit Money Banks’ Performance in Nigeria?

This study investigated the relationship between macroeconomic variables and the performance of deposit money banks in Nigeria, analyzed with suitable finametric tools. The results of the empirical examination found that all the macroeconomic variables employed (economic growth rate, interest rate, inflation rate, money supply and exchange rate in this study have no significant relationship with bank performance. It was also observed that each and jointly, the macroeconomic variables do not cause bank performance both in the short run and long run. Again, that bank performance responds insignificantly to the shocks of all the macroeconomic variables. Consequently the researchers advocate that deposit money banks in Nigeria with inherent discretionary policy be proactive to the monetary and fiscal policies of regulatory authorities in order to enhance their performance.

Sustainability Reporting and Financial Performance of Deposit Money Banks in Nigeria

This study examines how sustainability reporting is useful for assessing the financial performance of listed Deposit Money Banks in Nigeria. Specifically, the study focuses on the economic, environmental and social dimensions of sustainability reporting using “Return on Assets”, “Return on Equity” and “Earnings per Share” as proxies for financial performance of Deposit Money Banks in Nigeria from 2012 to 2018. The sample of the study was restricted to seventeen deposit money banks out of twenty one Banks quoted on the Nigerian Stock Exchange as at December, 2018. The required data were collected from audited annual financial statements and “sustainability reports” of the selected Deposit Money Banks for the period. A detailed analysis of the three bottom lines of profit (economic), people (social) and planet (environmental) impact was conducted. The descriptive and least squares regression analysis were adopted for the study considering the banks’ sustainability reporting practices against the selected performance proxies. The study concludes that sustainability reporting practices of Banks in Nigeria have substantial impacts on the financial performances of Deposit Money Banks in Nigeria. The study recommends that enabling legislations should be put in place to mandate enhanced sustainability practices among all deposit money banks in Nigeria as well as facilitate meaningful evaluation and measurement of earnings, social and environmental impacts in all areas of bank operations in Nigeria.

Electronic Fraud and Performance of Deposit Money Banks in Nigeria: 2008-2018

This research work examined electronic fraud and performance of Deposit Money Banks in Nigeria. It is a truism that Nigerian banks have lost of a lot of profit owing to the nefarious activities of fraudulent people including some unscrupulous elements in the banking industry who connive with fraudsters to perpetrate fraud of different magnitude. To this end, the Central Bank of Nigeria in conjunction with Nigeria Bankers Committee  established Nigeria Electronic Fraud Forum (NeFF) with the sole aim of monitoring online banks transactions and reporting any financial regulation infringements. Specifically, the objectives of this research work are to analyse the relationship between ATM fraud and performance of DMBs in Nigeria and to evaluate the relationship between POS fraud and performance of DMBs in Nigeria. The data collected were analyzed using basic descriptive ordinary least square (OLS) and multivariate regression panel data setting with econometric analyses. The results showed negative and insignificant relationship between electronic fraud channels and financial performance variables. The study concluded that there is no significant relationship between electronic fraud and financial performance of Deposit Money Banks in Nigeria in the period of study. The study recommended improved collaborations between DMBs, CBN and other stake holders via NeFF to tackle fraud.

Implications of Non-Performing Loans on the Nigerian Deposit Money Banks

The study examined the arguments and counterarguments within the scientific discussion on the implications of non-performing loans on the Nigerian deposit money banks. The main objective is to examine the effect of Non-Performing loan on the Performance of Deposit Money Banks in Nigeria. Data were sourced from Central Bank of Nigeria Statistical Bulletin. A systematization literary approach for data analysis was Auto Regression distribution lag (ARDL) bound tests. Findings revealed that there exist a long run significant relationship between Non performing loan and the Performance of Deposit Money Banks in Nigeria. It was revealed that persistence increase in Non-performing loans results in poor Performance of Deposit Money Banks in Nigeria. It was also discovered that Non Performing Loan reduces deposit money banks return on asset. The study therefore recommends that deposit money banks should employ competent risk managers that always use their skills to reduce the incident of non-performing loans in the Nigerian deposit money banks. The study also recommends that deposit money banks in Nigeria should always monitor the end-use of funds given to their customers in order to curb the incident of fund diversion which may result in non-performing loan.

International Financial Reporting Standards (IFRS) Adoption and Banks Performance in Nigeria : A Study of Selected Banks

The pace of globalization and integration of national financial markets has stimulated the need for a common financial language in the presentation financial reporting in order to facilitate efficient investment and financial decisions. Following the adopted the IFRS in Nigeria, several studies have been conducted on the performance of banking sector but majority focused on non-financial information. Thus, this study evaluates the impact of IFRS adoption on financial performance of Deposit Money Banks (DMBs) using ten (10) disclosure items obtained from IFRS checklist and extracted from selected DMBs financial statements and account between 2007 and 2017. The obtained data were analyzed with the Analysis of variance (ANOVA) & Bland Altman Analysis (BAA) and the results revealed that there is no significance difference in banks’ profit after tax measurement using the GAAP and IFRS as all the obtained parameters failed to yield significant results at 5% level of significance. Similarly, that there is no significance difference in banks’ return on asset measurement using the GAAP and IFRS as the obtained parameters showed insignificant results. However, there is a significance difference in banks’ total asset measurement using the GAAP and IFRS. In view of the major findings, we concluded that International Financial Reporting Standards has a significant effect on total asset measurement with insignificant effect on profit before tax and return on assets.

Digital Banking, Managerial Opportunism and the Performance of Microfinance Banks in Nigeria

Digital Banking, Managerial Opportunism and the Performance of Microfinance Banks in Nigeria

Impacts of Outsourcing Activities on Banking Industry Performance in Nigeria

The paper empirically examined impacts of outsourcing activities on performance of banks in Nigeria using data from twenty banks with fifty respondents selected from each bank. The findings emanated from this research exercise concluded that outsourcing has no effect on profitability and personnel cost of the bank but increases stock prices and also service delivery, hence, the study concluded that there is significant relationship between outsourcing activities and bank performance and that outsourcing is a strategic tool in the activities banks in Nigeria. The paper recommends and advice Banks to improve their outsourcing activities, operations and organizational performance. Banks should involve in Human resource (HR) outsourcing so as to take advantage of the use of expert services as well as to capitalize on the outstanding quality that external firms provide in performing the human resource (HR) functions.

ELECTRONINC BANKING AND PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA (2011- 2018)

Electronic banking has become a central concept in the banking industry due to its ability to increase operational efficiency and enhance financial performance. Nevertheless, the challenges of huge capital expenditure on development, and the increased cost of operation on the maintenance of e-banking facilities to achieve operational efficiency subsist in Nigeria. This paper examined the effects of electronic banking on the aggregate financial performance of Deposit Money Banks in Nigeria for eight years. The focus was on selected electronic banking products - Mobile payments, Automated teller machine (ATM), Internet banking (WEB) and Point of sale (POS) transactions. Secondary data were collected and analyzed quantitatively. Four hypotheses were formulated and tested at a ninety-five percent confidence interval using the Ordinary Least Square (OLS) inferential statistical tool. The results indicated that e-banking in the aggregate has a positive but insignificant effect on the overall performance of Deposit Money Banks (DMBs) in Nigeria.

Capital Structure and Commercial Banks Performance in Nigeria

Capital Structure and Commercial Banks Performance in Nigeria

Response of Banks to Fiscal Policy Stimuli in Nigeria

This study went into much neglected area of research; relationship between fiscal policy instruments and performance of banks in Nigeria. Various finametric tools were used to analyze data collected from Nigerian Deposit Insurance Cooperation and Central Bank of Nigeria for period of 1989 to 2018 inclusive. Resounding empirical findings were made as follows; Bank performance is autoregressive. That suggests that performance of banks in the past cannot be predicting future bank performance. It was conspicuously observed that Capital Expenditure, Non-Oil Revenue and Domestic Debt have positive and significant relationship with bank performance, while Recurrent Expenditure Domestic Debt afterwards negatively and significantly impact bank performance. It was also found that fiscal policy variables (Capital Expenditure, Recurrent Expenditure, Non-Oil Revenue and Domestic Debt) significantly impact bank performance both in the short run and long run. Since fiscal policy variables are found to exert significant impact banks’ performance in Nigeria, the researchers suggests to Federal government of Nigeria as a matter of urgency reconsiders the operation of Treasury Single Account. It is the view of the researchers that the Treasury Single Account be operated through deposit money banks by domesticating various Ministries, Departments and Agencies (MDAs) account with the deposit money banks. Keywords : Bank Performance, Fiscal Policy, ARDL, Nigeria. DOI: 10.7176/RJFA/11-8-12 Publication date: April 30 th 2020

Effect of Liquidity Management on the Performance of Deposit Money Banks in Nigeria

In this study, we examined the effect of liquidity management on the performance of banks in Nigeria. Our sample comprised 18 banks included in the Nigerian Stock Exchange (NSE) from 2011 to 2017. Thus, the firm-year sample constitutes 90 (18 banks × 5 years) financial statements. We found that liquidity management positively and significantly affected banks’ profitability. Capital adequacy significantly affected return on assets, return on equity, and return on capital employed. Similarly, we found a significant positive effect of asset quality on the performance indicators. The analyses also showed that the liquidity ratio effect is positive and significant on the performance indicators. This result shows that banks with proper liquidity management will increase their profitability over time. This suggests that to increase the overall networth of shareholders, banks should place a strong emphasis on liquidity management. Thus, liquidity should be managed to minimise potential default risks.

Impact of corporate restructuring on the financial performance of commercial banks in Nigeria

The implementation of the 2004–2005 bank capital reform in Nigeria, introduced to deepen the financial capacity of the banking system, has led to a major restructuring of the banking sector. The reform required banks to increase their equity capital by about 1150 per cent (from two billion to twenty-five billion naira) within 18 months. Due to compliance challenges, the reform formed just twenty-five out of eighty-nine banks that previously existed. More than seventy-five per cent of the banks emerged through mergers and acquisitions. However, despite the massive increase in assets and deposit growth, episodes of bank distress have remained a recurring irritant in the country’s financial system. This study compares bank performance in the pre- and post-reform periods to determine the usefulness or efficacy of the capital reform in boosting bank performance based on panel analysis of data from five banks. The study covered the period 1996–2016. The generalized method of moments was used to evaluate the parameters of the model. The result of the random effects model shows a weak positive effect of total assets and deposit growth on bank performance in the pre-reform period. However, the post-reform assessment reveals that while profitability is significantly low in large-sized banks, it is higher in smaller banks. Given the above evidence, the study asserts that profit performance of banks is substantially linked to restructuring of the sector.

Fraud and Bank Performance in Nigeria – Var Granger Causality Analysis

AbstractThis paper examines the causality between fraud and bank performance in Nigeria over the period 2000-2016 for quarterly financial data using Johansen’s Multivariate Cointegration Model and Vector Autoregressive (VAR) Granger Causality analysis. The results show a long-run relationship between the variables. Bank performance was found to be linked to Granger fraud variables and vice versa at 10% significant level. This study reveals that there was a direct causal relationship between bank performance and fraud because increase in fraudulent activities in the banking sector leads to reduction in bank performance. Hence, this study recommends that internal control systems of banks should be strengthened so as to detect and prevent fraud. In this way, bank assets would be protected.

Impact of Non Performing Loan on Bank Performance in Nigeria A Case Study of Selected Deposit Money Banks

Impact of Non Performing Loan on Bank Performance in Nigeria A Case Study of Selected Deposit Money Banks

Outsourcing Strategy and Financial Performance of Quoted Commercial Banks in Nigeria

This study investigates the impact of outsourcing on the financial performance of commercial banks in Nigeria over the period 2013 – 2018, while adopting a panel research design. The sample of the study covers the commercial banks with international authorization in Nigeria. These eight commercial banks represent the tier one banks. This set of commercial banks continue to grow in customer deposits, branch spread and loan issuance. They are considered to be the strongest banks. Financial performance was captured by using profit before tax, profit after tax and earnings per share as proxies, while the independent variable- outsourcing was denominated by the annual expenditure on outsourcing. All data was collected from the companies’ annual reports. The models were estimated using the Pooled Ordinary Least Squares method. The stata software was used in model estimation. Results from this study generally indicate that outsourcing has a positive impact on all the measures of financial performance. Based on the findings, the researchers recommend that outsourcing can contribute more to performance, if companies manage the outsourcing process better and involve the employees in the decision. Keywords : Business Processing Outsourcing, total outsourcing, partial outsourcing, core activities, non-core activities DOI : 10.7176/EJBM/12-3-08 Publication date: January 31 st 2020

MERGERS AND ACQUISITIONS IN THE NIGERIAN BANKING INDUSTRY: AN ANALYSIS OF SELECTED PERFORMANCE MEASURES

Business combination through mergers and acquisitions has become a global phenomenon to achieve economies of scale and higher productivity. This study evaluated the impact of mergers and acquisitions which started in 2005 on the performance of deposit money banks in Nigeria using a sample of ten (10) banks. This research made use of secondary data, obtained from the bank’s annual reports and statements of accounts covering a period of 1999-2018. Using four (4) variables; earning per share (EPS), net profit margin (NPM), assets utilization (AUT), and leverage (LEV), the study evaluated the performance of the banks before and after mergers and acquisitions using pair sample t-test. The results showed that there is significant difference in the performances of Deposit Money Banks in the pre and post-merger periods using the EPS and NPM yardstick but shows no significant impacts in the performances of Deposit Money Bank using AUT and LEV as yardstick. The study hereby recommends that the CBN should set and enforce better corporate governance standards for commercial banks and also enforce risk based supervision in banks.

Do Macroeconomic Variables Predict Deposit Money Banks’ Performance in Nigeria

This study investigated the relationship between macroeconomic variables and the performance of deposit money banks in Nigeria is incited by the heated arguments of finance and economic researchers’ on whether macroeconomic variables; Gross Domestic Product rate, interest rate, inflation rate, money supply and exchange rate are or not in control of the banks’ management banking sector. Based on that, researchers in this study want to take a solid position on whether macroeconomic variables positively or negatively or of no effect on the performance of deposit money banks (DMBs) in Nigeria. The study made use of suitable finametrica tools to analyze the models. The results of the Error Correction Model and General Method Moments results that all the macroeconomic variables employed (economic growth rate, interest rate, inflation rate, money supply and exchange rate in this study have no significant relationship with bank performance. VECG ranger Causality/Block Exogeneity Wald Test observed that each and jointly, the macroeconomic variables do not cause bank performance both in the short run and long run. Again, impulse response result revealed that bank performance responds insignificantly to the shocks of all the macroeconomic variables. Consequently the researchers advocate that deposit money banks in Nigeria within herent discretionary policy be proactive to the monetary and fiscal policies of regulatory authorities in order to enhance their performance.

A Critical Review of Empirical Studies on Assessing Bank Performance using CAMEL Framework

CAMEL as a tool for assessing the soundness of banks has become increasingly important following the recent financial crises in the banking sector. Poor asset quality and low capital base were seen as some of the factors responsible for the banking failures. Several studies have been conducted to assess the effect of CAMEL on financial performance in both developed and emerging economies. These studies are however, largely characterized by conflicting findings as a result of institutional differences and measurement choices. This paper uses exploratory and descriptive methods to review extant literature on the relationship between CAMEL ratios and bank performance with a view to exposing the controversy of measurement and methodologies in this area of research that has attracted little attention in emerging economies such as Nigeria. The paper posits that CAMEL rating system is a popular way of assessing the soundness of banks in various economic and institutional jurisdiction because of the strategic importance of banks in national economies. It however observes that CAMEL studies are just evolving in emerging economies such as Nigeria and therefore concludes that there is the need to explore the relationship between CAMEL ratios and performance of banks in Nigeria especially that the country is faced with new economic situations such as dwindling oil revenue and other factors that may have serious ramifications on the country’s banking sector. The paper is important in identifying literature gaps that will serve as an impetus for future empirical studies.