EMPIRICAL INVESTIGATION OF THE FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS BEFORE AND AFTER BANKING SECTOR REFORMS IN NIGERIA

Abstract

This study investigated the empirical investigation of the financial performance of deposit money banks before and after banking sector reforms in Nigeria. The principal objective of the study determined the impact of banking sector reforms on banks financial performance in Nigeria between the period of 1997 to 2013 which was divided into two periods of before and after banking reform. For the purpose of this study secondary data were utilized, that is annual reports, other published materials and Nigerian stock exchange fact book. In an attempt to test the significance of pre and post banking sector reform on financial performance in Nigeria, the study used parametric statistic (the test of equality of means) and result of hypotheses one, two, three and four showed that there is significant difference in return on asset (ROA), return on equity (ROE), earnings per share (EPS) and liquidity position on the banks between pre and post banking sector reform period, which mean that post banking reform is better than pre banking reform. The implication of these results is that the post banking sector reform yielded more returns than the pre banking sector reform. The study concluded that an effective banking sector reform is a regulatory imperative for a sustainable banking industry in Nigeria. Therefore, post banking sector reforms had significant impact on financial performance of Nigerian deposit money banks. It is therefore recommended among others that, management of banks should focus on maintaining sizeable amounts of reserves which can be ploughed back into the business, improving the quality of their credit portfolios, diversifying product and services, beefing up the capital in line with regulatory authorities and best practices.

Key Words: Financial Performance, Banking, Reforms, Nigeria