[The effect of commercial bank consolidation in Nigeria]

By

Acknowledgement

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I, [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

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Abstract

The current credit crisis and the transatlantic mortgage financial turmoil have questioned the effectiveness of bank consolidation programme as a remedy for financial stability and monetary policy in correcting the defects in the financial sector for sustainable development. Many banks consolidation had taken place in Europe, America and Asia in the last two decades without any solutions in sight to bank failures and crisis. The paper attempts to examine the performances of government induced banks consolidation and macro-economic performance in Nigeria in a post-consolidation period. The paper analyses published audited accounts of twenty(20) out of twenty-five(25) banks that emerged from the consolidation exercise and data from the Central Banks of Nigeria(CBN). We denote year 2004 as the pre-consolidation and 2005 and 2006 as post-consolidation periods for our analysis. We notice that the consolidation programme has not improved the overall performances of banks significantly and also has contributed marginally to the growth of the real sector for sustainable development. The paper concludes that banking sector is becoming competitive and market forces are creating an atmosphere where many banks simply cannot afford to have weak balance sheets and inadequate corporate governance. The paper posits further that consolidation of banks may not necessaily be a sufficient tool for financial stability for sustainable development and this confirms Megginson(2005) and Somoye(2006) postulations. We recommend that bank consolidation in the financial market must be market driven to allow for efficient process. The paper posits further that researchers should begin to develop a new framework for financial market stability as opposed to banking consolidation policy.

Chapter One

Introduction

Research Objectives

The essential objectives for this research are:

• To examine the impact of the consolidation exercise on the Nigerian economy and various sectors of its economy.

• Evaluation of the projection of the commercial banks and the prominent sectors of the economy after the crisis

• To evaluate the exposure of Nigeria's consolidated financial industry and its capacity to which it aids the development of the Nigeria economy.

• To examine how the consolidation of commercial banks affected other prominent sector in the economy and the current status of the banks.

Research Questions

• How efficient were the banking sectors in Nigeria before the consolidation of the commercial banks?

• What is the current situation of the banks which where consolidated?

• How has the consolidation of the banks contributed to the boost of other sectors of the Nigerian economy?

• How has the consolidation helped to improve corporate governance, less corruption and transparency in the financial sector?

• Where the consolidated banks in Nigeria able to ...