Mergers and Acquisition: The Solution to the Problem of Ineffective Financial Intermediation in the Nigerian Banking System
Abstract
The paper examined the effect of merger and acquisition on the efficiency of financial intermediation in the Nigerian banking system. Nigerian banking sector needs reforms that will lead to a more efficient stronger right for creditor, stronger accounting standard and practices, and a legal and regulatory framework that facilitates the exchange of information about borrowers. Reforms to improve both the level and the efficiency of financial intermediation in Nigeria banks should high on Nigerian policymakers’ agendas, because of the financial sector importance economic growth. This means that Nigeria must also improve the legal and regulation environment in which its financial institutions operates.The study aimed at evaluating the role of mergers and acquisition on bank liquidity and profitability in the Nigerian banking system. The study also aimed at determining the effects of mergers and acquisitions on capital adequacy of banks in Nigeria. Secondary data were used as a means of data collection. Regression analysis was used to analyse the results of the data collected. It was revealed that the relationship between deposit rate and capitalization in effect of merger and acquisition equation I was statistical significant. Secondly, the relationship between lending rate and capitalization in the effect of merger and acquisition equation II was not statistical significant. The study therefore, recommends that there is need to strengthen the overall financial system within which the banking sector operates. Secondly, subsequent policies are recommended to address firms and macro-economic fundamentals in order to drive down the high wedge between lending and deposit rates to further strengthen the efficiency of financial intermediation in the banking industry.
Keywords
Full Text:
PDFReferences
Alashi, S.O. (1991), “The implications of current monetary policies on safe and sound banking practice to ensure stability in the industry, NDIC Quarterly, 1 (3): Pg 25-35.
Altunbas, Yener, Otabekfazylov and Philip Molyneux (2002), “Evidence on the Bank LendingChannel in Europe”, Journal of Banking and Finance, vol. 26 (11), Pg 2093- 2110.
Asogu, J.O (1998), “The Relative Potency of Monetary and Fiscal Policies in Nigeria”, Central Bank of Nigeria Economic and Financial Review.Vol. 36, No 2.
Beck, T.A. Demirguc-Kunt, R. Levin and Vojislav, (2005) “Financial Structure and EconomicDevelopment, Firm, Industry and Country Evidence.World Bank.
Berger, Allen N. (2000) “The Integration of the Financial Services Industry where are the Efficiencies?” FEDS Paper No. 2000-36
Berger, A.N.W.C. Hunter, and S.J. Timme, (1993) “The Efficiency of Financial Institutions:
A Review and preview of Research Past, Presented Future.” Journal of Banking and Finance 17, Pg. 221-249.
Bernanke, B.S. and A.S Blinder (1992): “The Federal Funds Rate and the Channels of MonetaryTransmission “American Economic Review, Vol. 82. Pg. 1223-1241.
Bernanke, B.S and Lown C.S (1992), “The Credit Crunch”, Brooking Papers on Economic Activity: 2, Brookings Institutions, Pg. 205-247.
Bernanke, B.S. and Blinder A.S. (1988), “Credit, Money and Aggregate Demand” American Economic Review may, 78, Pg. 435-439.
Bernanke, B.S and Gertler, M (1995), “Inside the Black Box: The Credit Channel of Monetary Policy Transmission”, Journal of Economic perspectives 9, Pg. 27-48.
Bernanke, B.S and M. gertler (1989) “ Agency Costs, Net Worth and Business flunctuations”,
Amerian Economics Review, Vol. 79 (March) Pg. 123-1422..
Bernanke, B.S Gertler, M and Gilchrist S. (1996) “The Flight to Quality and the Financial
Accelerator”, Journal of Economics and Statistics. Vol. 4 No. 3 Pg 89-95
Berger, N.A.(1998), “The Efficiency Effects of Bank mergers & Acquisition: A Preliminary
Look at the 1990s Data” In Bank Merger &Acquisitionalseds Y. Amihud and G. Miller. Amsterdam: Kluwer Academic Publisher. Pg. 112-121.
De Bondt, G.J. (1999): “Financial structure and Monetary transmission in Europe: across-country study”, University of Amsterdam, Cameron (1967).
Gambacorta, L. (2004). “The Italian banking system and Monetary policy transmission:
Evidence from Bank-level data”. In Angeloni, L. Kashyap, A.&Mojon, B. editors, Monetary Transmission in the Euro area: A study by the eurosystem Monetary Transmission Network, pages 323-334. Cambridge University Press, Cambridge.
Gilechrist, S. and Zakrajsek. E. (1995) “The importance of credit for macroeconomic activity:identification through heterogeneity”. In Market behavior and macroeconomic modeling. Macmillan, London, chapter 5, Pg. 129-157.
Goldsmith Raymond W. (1995), Financial Intermediaries in the American Economy Since 1900,Princeton University Press.
Laffont, Jean-jacques, and Rene Garcia (1977), “Disequilibrium Economics for Business Loans,“Econometrica, Vol. 45, Pg. 118-1204.
Mckinnon, Ronald I, (1973) Money and Capital in Economic Development, (Washington: TheBrookings Institution).
Okafor, C (2005): “Turn around Management in Nigeria: A Conceptual Framework Knowledge Review, Pg. 64-72
Opiela, T. (2002): Deposit Guarantees and Distributional Effects of Monetary Policy on Bank
Lending, mimeo, De Paul University.
Shew, E.S., 1973, Financial Deepening in Economic Development, New York, NY, Oxford University Press.Short and O’ Driscoll, Jr, 1983.
Sinkey, J.R. (1989), “bank Financial Management in the Financial Services Industry,” Macmillian Publishing Company.
Skander J. van den Heuvel, 2007. “The Bank Capital Channel of Monetary Policy”, Mimeograph, University of Pennsylvania.
Van den Heuvel, Skander J. 2001. “The Bank Capital Channel Monetary Policy.” Unpublished Paper, University of Pennsylvania.
Vazquez, F. (2003): The Bank Lending Channel: Evidence from Emerging Economies, MonedayCredito, issue 216, Pg. 177-200.
Vesala, J (1995), “testing for Competition in Banking Behavioural Evidence from Finland”, Bank of Finland Studies, E.I
Worms, A. (2003). The reaction of Bank Lending to Monetary Policy measures in Germany.InAngeloni, I., Kashyap, A., &Mojon, B., editors, Monetary Transmission in the Euro Area: A study by the Eurosystem Monetary Transmission network, Pages 270-283. Cambridge University Press. Cambridge.
Refbacks
- There are currently no refbacks.
Copyright© 2015 Journal of Research in Business, Economics and Management. All rights reserved.
ISSN 2395-2210
For any help/support contact us at editorial@scitecresearch.com, jrbem@scitecresearch.com.