Commenced in January 2007
Frequency: Monthly
Edition: International
Paper Count: 30063
The Impact of Bank Consolidation on the Performance of SMES in Nigeria

Authors: Okolo Chimaobi Valentine

Abstract:

This paper seeks to assess the implications of bank consolidation on the performance of small and medium scale enterprises in the Nigerian economy. Multiple linear regression technique and correlation matrix test were employed to measure the extent to which small and medium scale enterprises asset size, survival and access to credit were influenced. The result showed that bank deposit (BD) and bank credit (L or BC) impacted on asset size and survival of small and medium scale enterprises. None of the variables had significant impact on SMEs access to credit. There is a shift of focus by commercial banks away from small and medium scale enterprises (small customers), which is evidenced by the significant negative influence of bank credit to both the survival and asset size of small and medium enterprises. While micro finance banks work hard at providing funds to small and medium scale entrepreneurs, their capacity to meet the needs of these entrepreneurs is constrained. CBN should make policies that will boost micro finance bank’s capital and also monitor closely the management of the banks to ensure prudent financing of small and medium scale investments.

Keywords: Bank consolidation, small and medium enterprises.

Digital Object Identifier (DOI): doi.org/10.5281/zenodo.1338434

Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF

References:


[1] Abu I. N and Ezike J. E (2012), “The Role and Sustainability of Microfinance Banks in Reducing Poverty and Development of Entrepreneurship in Urban and Rural Areas in Nigeria”, International Journal of Business Administration Vol. 3, No. 3.
[2] Aburime, U. T. (2008). Concentration Implication of the Bank Consolidation Exercise in Nigeria. Retrieved on November 10, 2011 from http://www.cibng.org/publications/Bank%20Concentration%20 in%20Nigeria.pdf.
[3] Adegbaju A. A and F.O Olokoyo (2008), “Recapitalization and banks’ performance: a case study of Nigerian banks”, African Economic and Business Review, 6 (1)
[4] Adeyemi, K. S. (2008), “Banking Sector Consolidation in Nigeria: Issues and Challenges” Journal of Business, Economics and Management.
[5] Asikhia O.U (2009), “Attitudinal Response of Small and Medium Scale Business Owners to Microfinance Banking in Nigeria”, European Journal of Social Sciences – Volume 11, Number 4, pp 599-618
[6] Central Bank of Nigeria (2008), “The Impact of Post Banks Consolidation on the Nigerian Economy”, Business Guardian, December 13 Custom Duties (dumped and subsidied goods Act No. 9 of 1959
[7] Egwurube, O.A (2012), “The Reforms of the Banking Sector and Issue of Economic Development in Nigeria: A Lesson for the Sub-Sahara Countries”, International Journal of Business and Management Tomorrow Vol. 2 No. 3, pp 1-8
[8] Graig S G and P Hardee (2004) The Impact of Bank Consolidation on Small Business Credit Availability Journal of Economic.
[9] Iloh, J.V.C., Okolo, V.C., and Ani, W. U., (2013). The Effect of Bank Consolidation on Lending to Small and Medium Scale Enterprises in Nigeria, 3rd International Conference on Management, Hydro Hotel, Penang, Malaysia. Retrieved from: http://www.internationalconference.com.my/proceeding/icm2013_proce eding/016_088_3rdICM2013_Proceesing_p264.pdf
[10] Ningi, S.I and A.Y Dutse (2008), “Impact of Bank Consolidation Strategy on the Nigerian Economy”, African Economic and Business Review, Vol. 6 No. 2, pp 26-45
[11] Odoko, F. O. (2008), “Beyond finance: Strategies for poverty reduction in Nigeria’, Central Bank of Nigeria Bullion, 31(1), 35-36.
[12] Ogechukwu A. (2006), The Role of Small Scale Industry in National Development in Nigeria, Texas: Prentice Hall
[13] Ogujiuba, K.K; Ohuche, F.K and A.O Adenuga (2004), “Credit availability to small and medium scale enterprise in Nigeria- and importance of new capital base for banks-background and issues”, Central Bank of Nigeria Bullion
[14] Olaitan, M. A. (2006), “Finance for Small and Medium Scale Enterprises in Nigeria”, Journal of International Farm Management, Vol. 3 No. 2 January
[15] Omah, I., Durowoju, S. T., Adeoye, A. O., Elegunde, A. F., (2012), Post-Bank Consolidation: A debacle in the survival of SMEs in Nigeria “An Empirical Study”, Australian Journal of Business and Management Research Vol.2 No.08 (01-06).
[16] Onwumere, J.U.J, I.G Ibe and O.C Ugbam (2012), “The Impact of Micro-Credit on Poverty Alleviation and Human Capital Development: Evidence from Nigeria”, European Journal of Social Sciences, Vol.28 No.3, pp. 416-423
[17] Soludo, C. C. (2004), “Consolidation and Strengthening Of Banks”, Speech Delivered At the Meeting of Bankers Committee 6th August 2004
[18] Somoye R.O.C (2008), “The performances of commercial banks in postconsolidation period in Nigeria: An empirical review, European Journal of Economics, Finance and Administrative Sciences, 14.
[19] Strahan P.E and J. Weston (1996), “Small business lending and bank consolidation: Is there cause for concern?” Current Issues in Economics and Finance 2, Federal Reserve Bank of New York
[20] Ugwunta, D.O., W.U Ani and G. Ugwuanyi (2012), “The Effect of Bank Consolidation on Bank Credit Reduction: Evidence from Selected Banks in Nigeria”, International Journal of Business and Management Tomorrow Vol. 2 No. 3, pp 1-8
[21] Umar U (2009), “The impact of the banking industry recapitalization on employment in Nigerian banks”, European Journal of Social Sciences, 11 (3): 486-495
[22] Uchendu, O. A. (2005). Banking Sector Reforms & Bank Consolidation: The Malaysian Experience. Bullion, 29(2).