ABSTRACT
The
current credit crisis and 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. The project attempts to examine the performances of
banks induced bank consolidation and macroeconomic performance in Nigeria in a
post consolidation period. The work further analysis published audited account
of twenty (20) out of twenty – five (25) banks that emerged from the
consolidation exercise and data from Central Bank (CBN), that is, the
researcher made use of secondary sources of data for the study. The research
employed the use of ordinary least square distribution in the test of two
hypotheses formulated. Hypothesis 1, 2, 3, ‘t’ test distribution were used by
the researcher and all hypotheses were accepted, while only ordinary least
square analysis was used in hypothesis two, which showed that non performing
assets of Banks has negative effect on the performance of banks in the post
consolidation exercise. More so the use of simple percentage conversion were
used in measuring or determining the macroeconomic variables on the yearly
basis which covers the pre/post consolidation era 2004-2005 for the research
analysis in chapter four; the following result/conclusion emerged from research
project work: That consolidation programme has not improve the overall
performance of banks significantly, and also has contributed marginally to the
growth of the real sector for sustainable development; The bank 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; That consolidation of banks may not necessarily be sufficient tool
for financial stability for sustainable development and we recommend that bank
consolidation in the financial market must be market driven to allow for
efficient process.
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND OF STUDY
Banks serve vital intermediary role in a market-oriented economy and have
been seen as the key to investment and growth. Falegan (1987) and Bashir and
Kadir (2007) observed that commercial banks play a crucial role in the nation’s
economy, by using various financial instruments to obtain surplus funds from
those that forgo current consumption for the future. They also make same funds
available to the deficit spending unit (borrowers) for investment purposes. In
this way, they make available the much need investible funds required for
investment as well as for the development of the nation’s economy.
It is important to note that
the business of banking is service-oriented, that is, banks render services to
their customers. This is why Adekanye (1986) traced the origin of banking to
the Italian merchants. The term “bank” is from an Italian language that simply
means ‘Bench or Benco’, it is a process that developed out of the ingenuity of
the then Italian
blacksmith who specialized in the act of building boxes for safe keeping of
jewelries and ornaments. This process was further expanded to numbers of banks
in the economy, especially the Bank Consolidation of 2005 which brought the
number of banks to 24. This has completely reshaped the face of the financial
services industry as we include the safe keeping of other valuables, including
money.
The fundamental changes in the industry in the last few years have
brought a reduction in the industry now have more enlightened investors that
are keen on a higher return on their investment (Pandy, 2004). With more people
now becoming shareholders in the banking sector, it is apparent that more
dividends will be paid out to these new shareholders.
As such dividend decision is one of the three main financial decisions of
any firm and it involves the determination of the proportion of a company’s
earnings to be paid-out or retained earnings (Olowe, 1998, ICAN, 2006).
Consequently, investors are keenly interested in the
A dividend policy therefore is the tradeoff between retained earnings, on
one hand, and paying out cash as dividend, on the other hand (ICAN, 2006).
Olowe (1998) opined that dividends are distributions, made out of a company’s
earnings after the obligations of all fixed income holders have been met. The objective
of this study therefore is to assess the factors that could be responsible for
the performance of banks in the post consolidation era in Nigeria, where
performance is determined through the level of profitability.
1.2 STATEMENT
OF THE PROBLEM
The problem which this study
seeks to solve is to ascertain the reasons for banks poor performance in the post
consolidation era in Nigeria. Improvement in individuals, groups or
organizations cannot be guaranteed except or unless there is a process of
evaluation. Evaluation as a concept is therefore a process by which an
organization or firm obtains a feedback on the ways it has carried out its
activities over time. Performance links an organization’s goals and objectives
with organization’s decisions (Abdulkadir, 2007). It is important to note that
before we can declare that an activity has improved, it must have been measured
so that the extent of improvement can be determined and/or quantified.
Measurement is therefore the first step in achieving improvement.....
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Item Type: Project Material | Attribute: 100 pages | Chapters: 1-5
Format: MS Word | Price: N3,000 | Delivery: Within 30Mins.
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