THE TRILOGY OF 2004 BANK CONSOLIDATION POLICY, POST 2004 BANK PERFORMANCE AND THE MEDIATION OF INSECURITY IN NIGERIA

Abstract
This study evaluated the impact of the 2004 bank consolidation policy on the post-performance of banks in the country, given the ever-rising security challenges. The study employed a quantitative technique in which econometric tools were used to analyse the data collected from the annual financial statement of banks, the Central Bank of Nigeria statistical bulletin, and the Nigeria Bureau of Statistics (NBS) from 2006 to 2017. Panel regression analysis for four banks, including Guaranty Trust Bank (GTB), United Bank for Africa (UBA), Union Bank, and Zenith Bank, and their key performance ratios such as Return on Equity (ROE), Return on Asset (ROA), and net interest margin (NIM), was estimated to reveal mixed findings. In post-consolidation bank performance, both Total Assets and Liquidity Ratio showed significant and positive gains. On the other hand, capital structure and total deposits, in the advent of security challenges, revealed negative and significant variations in bank performances in Nigeria during the period reviewed. Whenever insecurity looms, there is the propensity for a decline in business activity, which leads to a low capital structure and bank deposits by customers. The security improvement can turn these woes around to reverberate through banks’ financial intermediation activities in the post-consolidation banking era.

Keywords: Consolidation Policy, Bank Performance, Insecurity JEL Classification: F52, G33 G34
Introduction
The desire of many firms to integrate has grown throughout the globe. This phenomenon attracts the attention of different sectors of the global economy. One of the sectors affected most is the banking industry. The main idea underlying the consolidation policy in this sector is to restructure the banking system from one dominated by many small and relatively unstable banks to one with a few bigger and more reliable banks. The expected economic benefits as the rationale for pursuing a consolidation program include income enhancement, cost reduction, easy access to improved technology, and growth. The multiplicative impact of mergers and acquisitions via consolidation, according to Akinsulire (2002), includes economies of scale via increased output; elimination of redundancy of equipment and personnel functions; cost savings, stronger financial base; securing competent management; improve earnings per share, and gaining access to the financial market are some of the deliverables from the consolidation exercise.


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