The Impact of Consolidation on the Performance of Banks in Nigeria

Taiwo Tope Olayinka¹ and  Musa Adeiza Farouk²

¹Department of Accounting, Ahmadu Bello University, Zaria – Nigeria

Email: Tope.taiwo@yahoo.com; Tel: +2348032811133

²Department of Accounting, Ahmadu Bello University, Zaria – Nigeria

Email: musafarouk@yahoo.com or mscmusafarouk@yahoo.com;  Tel: +2348034063226

Accepted 25 September 2014

Abstract

This study evaluates the impact of consolidation on the performance of banks in Nigeria. The study used a period of 12 years from 2000 to 2011 comprising six years pre and post consolidation era. The population of the study is (22) banks in which four (4) banks are drawn using stratified sampling technique. The study utilizes secondary data obtained through annual reports and CBN banking supervision. T-test was employed to test the hypothesis formulated. The findings of the study show that consolidation has significant positive impact on the performance of banks in Nigeria. The study therefore recommends that the management of banks should work hard to ensure that adequate measure is being put in place to determine increasing rate of return on asset, return on equity and  net profit margin of their banks reform of this nature such as consolidation of banks is one of the ways to improve the banking sector financial stability.

Keywords: Consolidation, Banks, Performance