Skye Bank Research Articles

Modeling Volatility of Daily Stock Return Using Generalized Autoregressive Conditional Heteroscadatic with Skewed Error Distribution and Stochastic Volatility Models

The problem of how best to model volatility of stock prices returns have continued to occupy the minds of researchers in this area. This study therefore compares the performance of two competitive volatility models: The Stochastic Volatility (SV) and Generalized Autoregressive Conditional Heteroscedasticity (GARCH) based on skewed error distributions models using daily stock returns of Fourteen Nigerian banks. The daily stock closing price of the selected banks were collected for the period 4/1/2007 to 31/12/2021 and the stationarity, normality and ARCH effect of the series were tested. The parameter of SV and different types of GARCH models based on skewed normal, skewed student t and skewed generalized error distribution were estimated and selection of the best model was done using Akaike Information Criterion (AIC). Post estimation and evaluation were carried out using the Mean Square Error (MSE) and Root Mean Square Error (RMSE). Results of analysis revealed a stationary but asymmetrically distributed return series with ARCH effect. The model forecasting performance proved APARCH (1,1) based on student t-distribution as the best among the competing GARCH models with the record of the least AIC value in ten of the fourteen daily bank stocks returns. Although, APARCH (1,1) and SV models were found to be comparable. SV model was however recommended as the best since it recorded the least RMSE value in 11 (79%) of the 14 bank stocks against 3 (21%) bank stock in favour of APARCH (1,1). This implies that SV model was found to be adequate in modeling volatility of the daily stock returns of ECO Bank, First City Monument bank, Fidelity bank, first bank, Guaranty Trust bank, Stanbic IBTC bank, Sterling bank, United Bank for Africa, Union bank, WEMA bank and Zenith bank; while APARCH (1,1) base on Skewed student ‘t’ distribution was preferred in modeling volatility of Access bank, Skye Bank and Unity bank. Results also showed the presence of volatility persistence, suggesting uncertainties and the risk of losses by investors. Therefore, it can be deduced that the application of a stochastic volatility model to the selected stock returns would drastically minimize the losses by investors.

THE RELATIONSHIP BETWEEN THE INVESTMENT PORTFOLIO AND BANKING FINANCIAL PERFORMANCE IN NIGERIA

The study aims to investigate the relationship between the investment portfolio and banking financial performance in Nigeria. The study took an ex post factor research design and firm was used as the unit of analysis. A population of the 15 commercial banks was taken but Skye Bank was screened out due to the unavailability of data and 14 banks were used as the sample for this study. Panel data analysis was used to analyze the data with E-views version 9 using the three models; without effect, random effect and fixed effect. The study reveals that investment in bond has a significant but negative effect on return on the asset while cash reserve had a positive but an insignificant effect on financial performance and treasury bills has a negative and an insignificant effect on financial performance. There is also a need for the management of investment companies to have a solid organization structure, as it will influence their investment portfolio choice, to avoid insignificant choices like treasury bills which do not impact on their financial performance. The research, therefore, recommends that the management of commercial banks should decrease their investment in bonds, cash reserve and treasury bills so as to avoid depleting the return on asset and consider investment in other portfolios like insurance, pension, forex and so on.
 Keywords: Investment Portfolio, Banks, Financial Performance, Treasury bill, Cash reserve

AUDIT QUALITY, GOVERNANCE MECHANISMS AND EARNINGS MANAGEMENT OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA

Corporate failures across the globe have become an issue of concern for stakeholders andregulators. Financial reporting scandals that occurred in oceanic bank, intercontinental bank andthe recent bank crises of Skye Bank in 2016 really motivated the need for this study. The studyexamines audit quality, governance mechanism and earnings management of listed deposit moneybanks in Nigeria for the period of eleven years from 2009-2019. The population of the study consistsof all the 14 listed deposit money banks in Nigeria as at 31st December, 2019. The study adoptedexpo-factor and correlation research designs, and multiple regression was employed as techniqueof data analysis. The findings of the study revealed that audit independence, managerial ownershipand board independent have significant negative impact on earnings management of quotedNigerian banks while auditor size and audit tenure have insignificant influence on earningsmanagement of listed deposit money banks in Nigeria. In line with the findings, the study thereforeconcluded that audit independence, managerial ownership and board independence havesignificant negative impact on earnings management of banks in Nigeria while audit firm size andaudit tenure have no significant impact on earnings management of listed deposit money banks inNigeria. It is therefore recommended that Nigeria listed deposit money banks should maintain theaudit fees they are paying to the audit firm or increase it as any attempt to reduce the audit fees canincrease earnings management. However managerial shareholding should be increase as it willreduce earnings management and also board independent directors on the board should beincreased from minimum of two as it will reduce earnings management of listed deposit moneybanks in Nigeria on the other hand there is no significant impact between audit firm tenure andaudit firm size on earnings management of listed deposit money banks in Nigeria. For audit firmsize the study recommended that local audit firms should be used instead of the Big 4 as the size have no effect on earnings management. Also the study recommended that for audit tenure the bankshould maintain its audit tenure as it does not have any influence on earnings management.

Intercontinental Hotel Group's Exit from Nigeria: Analysis of a Receiver/Manager's Discretion to Repudiate Pre-Receivership Contracts

Intercontinental Lagos Hotel has been rechristened “Lagos Continental Hotel”. The renaming of the 358-room five-star hotel followed the termination of a six-year Hotel Management Agreement (“HMA”) between the hotel owners, Milan Industries Ltd (Milan) and multinational hotels company, Intercontinental Hotels Group (“IHG”). On 3 January 2018 IHG issued a notice of termination of the HMA with effect from 18 January 2018. IHG alleged non-cooperation by Milan’s receiver/manager in ensuring that the hotel avoided a material breach of the HMA and maintained its operating licence. IHG further alleged Milan owed IHG NGN995,223,818 in fees. The financial woes of Milan came into limelight in May 2017 when a Federal High Court ordered the takeover of the hotel by a receiver/manager appointed by Skye Bank Plc. Court processes showed that Skye Bank granted Milan loan facilities of US$29.8million and NGN3.8billion and an overdraft facility of NGN500million. The facilities were to finance the construction of the hotel. The loans were secured by a deed of legal mortgage which covered the hotel. Milan reportedly defaulted resulting in the appointment of the receiver/manager.

An Appraisal of the Central Bank of Nigeria’s Approach to Resolution of Skye Bank Plc

On 21 September 2018, the Central Bank of Nigeria (CBN) revoked the banking licence of Skye Bank Plc on the ground that it was significantly undercapitalised. The CBN also claimed that Skye Bank’s shareholders were unable to recapitalise the bank. CBN’s first regulatory intervention in Skye Bank was on 4 July 2016 when the CBN replaced some board members and injected N350 billion into the bank. Polaris Bank Ltd (a bridge bank) has been established to take over the assets and liabilities of Skye Bank. The CBN and the Nigerian Deposit Insurance Corporation (NDIC) have turned over Polaris Bank to the Asset Management Corporation of Nigeria (AMCON). AMCON has injected N786 billion into Polaris Bank and is expected to source for a credible investor. This write-up examines Skye Bank’s resolution and key issues arising therefrom such as the special insolvency regime for banks, the bridge bank approach, bail-outs and bail-ins, the too-big-to-fail principle and moral hazard, and the treatment of Skye Bank’s shareholders.

Effect of Corruption on Corporate Governance in Selected Area Offices of Deposit Money Banks in Enugu State, Nigeria

The study seeks to examine the effect of corruption on corporate governance in selected area offices of deposit money banks in Enugu State, Nigeria. The specific objectives were to; (i) determine the extent to which bribery affects the board of directors’ functions, (ii) ascertain the extent to which fraud affects the managers’ accountability, and (iii) identify the nature of the relationship existing between money laundering and shareholders’ investment in selected area offices of deposit money banks in Enugu State, Nigeria. The study adopted the descriptive survey design. The population of the study was 1197, which comprised the senior and junior staff members of the five selected banks (United Bank for Africa Plc, First Bank of Nigeria Plc, Access Bank Plc, Fidelity Bank Plc, and Skye Bank Plc.). The sample size of 316 was obtained from the population using Freud and William’s formula at 5% error tolerance and 95% level of confidence. Data collection was done via questionnaire and oral interview guide. Simple Linear Regression Analysis and Pearson Product Moment Correlation were used for data analysis.

Causal Relationship between Liquidity and Profitability of Nigerian Deposit Money Banks

The aim of this paper is to examine the existence and direction of causality between liquidity and profitability of deposit money banks in Nigeria. Fifteen quoted banks out of the existing nineteen banks were selected for the study. They are; Guarantee Trust bank, Zenith bank, Skye bank, Wema bank, Sterling bank, First City Monument bank, United Bank for Africa, Eco bank, First bank, Access bank, Diamond bank, Unity bank, Fidelity bank, Union bank and IBTC bank. Pairwise Granga Causality test was carried out to determine the presence and direction of causality between banks’ liquidity and profitability. From the finding of this study, at 5% and 10% level of significance, it was revealed that the F-statistics corresponding to the null hypotheses of no causal relationship (both unidirectional and bidirectional) between LODEP (a proxy for liquidity) and ROE (profitability measure) for banks like Guaranty trust bank, Zenith bank, Sterling bank, Diamond bank, IBTC, Unity bank, UBA, Fidelity bank, Wema bank, Union bank, and Eco bank, are too low and as such there is no enough evidence for the rejection of the corresponding null hypotheses. Thus, the result revealed that there is no causal relationship (be it unidirectional or bidirectional) between liquidity and probability of Guaranty trust bank, Zenith bank, Sterling bank, Diamond bank, IBTC, Unity bank, UBA, Fidelity bank, Wema bank, Union bank, and Eco bank. The result also shows that there is a trace of unidirectional causality relationship running from liquidity to profitability for banks like Skye bank, First bank, Access bank and FCMB. Based on the findings and conclusions, the study recommend that the apex bank (Central Bank of Nigeria) should ensure close supervision and monitoring of deposit money banks’ strength and level of liquidity in an attempt to stabilize and strengthen the financial sector of the economy.

An Empirical Investigation into the Effects of Customer Relationship Management on Bank Performance in Nigeria

The information age has created a new segment of knowledgeable customers. It has become very imperative for Banks to pay close attention to the roles of more active groups of customers. This study therefore aims to provide the results of an in-depth investigation of the link between Customer Relationship Management (CRM) and Bank Performances in the financial services industry. Customer Relationship Management literature acknowledges the proactive nature of the firm's strategy by building on relationships with customers. Relationships help create unique, difficult to imitate knowledge for firms, which seek to understand how advances in relationship marketing enhance our understanding of knowledge required for competitive success, and how advances in relationship knowledge and marketing actually assist the process of advancing Bank Performance. For the purpose of this research, the historical and survey research methods were adopted. Data were collected from both primary sources, using some three Nigerian Commercial Banks (Access Banks, Skye Bank and Wema Banks) and secondary sources. Hypothesis formulate were tested using the chi-square analysis. The study found out that Customer Relationship Management has a positive impact on Banks performances. Customer relationship management is the process of managing detailed information about individual customer and carefully managing all customers touch points to maximize customer loyalty. A customer’s touch is any occasion in which a customer encounters the brand and product from actual experience to personal or mass communications to causal observation. Customer relationship management is used by banks and other organization as a business strategy to increase performance through customer satisfaction. The study therefore recommends amongst others that Banks Staffs should be adequately and continuously trained and equipped on practices in Customer Relationship Management and should be given frequent seminars reminding them on the importance of CRM and to also update their knowledge. And this would ensure inter-personal relationships between the staff and their customers to ensure free flow of information and complaints from the customers.

A Study on Customer Relationship Management Practices in Selected Commercial Banks with Reference to Nigeria

This research article examines the importance of CRM in creating a sustainable relationship between customers and commercial banks in Nigeria. The study investigates customers perceptions of CRM practices of selected commercial banks in Edo State, Nigeria; relationship between the customers perception and attitude of customers towards CRM practices of banks in Nigeria; impact of customer help desk of selected banks on customers perception of banks in Nigeria; and the relationship between the CRM practices and attitude of the customers towards factors contributing to services quality. For the purpose of this current study, a sampling survey was conducted among 120 customers of selected commercial banks in Nigeria namely Fist Bank Nigeria Limited, Skye Bank and EcoBank, Nigeria with the help of a structured questionnaire. The tools used for this study are Percentage analysis and Chi – Square test. The study shows effective CRM practices can lead to confidence in the formal banking sector given the cultural perceptions of banks in Nigeria and the wide spread practices of the Esusu which is a traditional method of saving money adopted by millions of Nigerians. Also, the study reveals that commercial banks can build relationship with customers by making use of technology and managing information to improve service delivery and achieve increase in their customer base, customer royalty and retention.

How Recurrent Bank Failures Contributed to the Under Development of the Nigerian Economy

The study attempted to investigate how the nagging and recurrent bank failures in Nigeria have contributed to the under-development of the Nigerian economy. It also critically assessed the extent to which these identified factors are accountable for the failure and to ascertain other factors that may be responsible. The study involves 81 respondents from selected banks (First bank, Enterprise bank, Skye bank, Stanbic IBTC, and Zenith bank) in the Nigerian Banking industry. Data for the study was drawn mainly from primary sources. The questionnaire was used in collecting data for the study. The data generated was analyzed using simple descriptive statistics (frequency analysis). The study reviewed and confirmed the presence of Systemic failure in the Nigerian banking industry and its effect on economic growth. All the major factors attributable to be causing failure namely institutional, economic and political were discussed, some of which are; poor management, inadequate monitoring of bank operations by regulatory authorities, ineffective mechanism for fraud prevention, poor risk management, poor credit analysis and administration. To arrest these worrisome trend and also avoid their further encroachment on the entire banking system, the regulatory authorities are advised to be proactive in management and ensuring safe and sound Banking practices which will be achieved by introducing more innovative, pre-emptive and urgent measures of evaluating the features of failure at an early stage so as to drastically reduce the menace of Bank failures and its attendant consequences on the Nigerian Economy as a whole.

Impact of Customer Relationship Management on Perceived Bank Performance in Oyo Town, Nigeria

This study investigated the impact of customer relationship management (CRM) on perceived bank performance. The objectives of this study were to determine the relationship between the variables measuring customer relationship management (bonding, trust, commitment, communication and satisfaction) and bank performance. The study employed survey research. Primary data was used for the study with questionnaire as research instrument. The subjects were one hundred and thirteen employees of selected banks in Oyo town (gt bank, stanbic bank, zenith bank, eco bank, uba and skye bank). The four hypotheses formulated for this study were tested using T-test, Pearson’s correlation, regression, and analysis of variance with the aid of statistical package for social sciences (SPSS). The findings from the study revealed that commitment independently predicted perceived organizational performance. Also, there was a significant difference between bonding and perceived organizational performance. Furthermore, there was main and interaction effect of bonding and trust on Perceived Organizational Performance. In addition, trust, communications, satisfaction, commitment and bonding jointly and independently predicted perceived organizational performance. Based on the findings, it was recommended that there is a need for organizations especially banks to have a good relationship with their customers which can sustain competitive advantage. It is also recommended that organizations should take cognizance of their organizational structure to attract and retain qualified employees that can contribute positively to bank performance. Key words: Customer relationship management; Bonding; Commitment; Communication; Satisfaction and bank performance

The Impact of Automated Teller Machines on Customers’ Business Transactions in Selected Banks in Minna Metropolis, Niger State

This study was carried out to determine the emerging impact of Automated Teller Machines an off-shut of ICTs on Customers’ Business Transactions in selected banks in Minna metropolis, Niger state. It was a survey research. Four research questions were raised and answered using the results of analysis of the data obtained. The instrument used for data collection for the study was a validated researcher made questionnaire tagged “Emerging Impact of Automated Teller Machines on Customers Transactions Questionn aire (EIATMCTQ)”, with a reliability index of 0.68. One hundred and fifty (150) respondents were drawn randomly from the selected banks. Each of the participating banks donated ten (10) staff while twenty (20) customers were also randomly drawn among the investigated banks in the study. The participating banks selected for the study were the First Bank of Nigeria PLC, the Guaranty Trust Bank PLC, the Intercontinental Bank PLC, the Skye Bank PLC and the Unity Bank of Nigeria PLC respectively from the Minna metropolis Based on the observations made, it was concluded that there is significant impact of the automated teller machines (ATM) on customers daily business transactions. The study also revealed that Bank customers now prefer the use of ATM more than the counter–face to face transaction. However, the study also identified certain threats against ATM use in some ways. The study concluded by recommending that the ATM should be fortified with better security arrangements, in future and , that customer shoul d be well acquainted/educated continuously on how best to use the ATM wherever need arises to do so.Key Words: Automated Teller Machine (ATM), Information Communication Technology (ICT), E-Transaction, E-Banking, Financial Networks.