Post- Consolidation and Banks’ Profitability in Nigeria (2004-2017): Investigating the Nexus.

Abstract

The study examined the relationship between post-consolidation and banks’ profitability in Nigeria for the period (2004-2017). Time series data were used and were sourced from the Central Bank of Nigeria Statistical Bulletin. The study used Return on Assets of Banks’ as proxy for banks’ Profitability and employed as the dependent variable; whereas, Aggregate Current Account Balance, Aggregate Savings Account Balance and Aggregate Fixed Deposit Account balance were also adopted as explanatory variables to measure the post-consolidation. Hypotheses were formulated and tested using Vector Error Correction Model (VECM). The study revealed that the variables are stationary at levels. There is also a long-run equilibrium relationship between post-consolidation and banks’ profitability in Nigeria. The result confirmed that about 62% short-run adjustment speed from long-run disequilibrium. The coefficient of determination indicates that about 37% of the variations in banks’ profitability is explained by changes in the post-consolidation variables. The study recommended that bank management should strengthen their supervising units of credit administration in order to avoid the problem of non-performing loans. For Nigeria banks to be a major player in domestic and international market, banks capital should be above minimum regulatory requirements at all times. Shareholders’ funds and total assets of banks should be periodically evaluated and aggregate marketing should be vigorously intensified by the banks.

Keywords: Post-consolidation, banks’ profitability, Nigeria, investigating the nexus.