Branch Network Growth and Banks Performance in Nigeria (1981-2013)

Abstract

Despite significant technological innovation in retail banking services delivery, the number of Nigerian bank branches has grown steadily over time. This paper assesses the implications of these developments by examining the contribution of the branches to banks performance. The study uses the whole banks in Nigeria during the period 1981 and 2013 using a pooled data analysis on ordinary least square(OLS).The variables used include the total number of banks branches in rural and urban area and those domiciled abroad regarded as foreign branches. It also considered the total number of banks at each period and year of study while the growth in Total Asset is proxied as the dependent variable. Our findings showed that there is a positive relationship between the growths of the branches in the rural, urban and foreign centres which implies that there is need to open more branches if the banks wants the Asset to grow. We find no systematic relationship between number of banks and Asset growth perhaps because banking organizations optimize the size of their branch network operations as part of an overall strategy involving both branch-based and non-branch-based activities. The study suggested that branching activities should be a major work and decision of the banks so as to bring more customers to the bank who will now use the various electronic platforms for service installed by the banks.

Keywords: Banking, Bank Branches, Deposits, Retail banking, Total Asset,1981-2013