Commenced in January 2007
Frequency: Monthly
Edition: International
Paper Count: 31519
The Impact of Bank Consolidation on Lending to SMES in Nigeria

Authors: Chimaobi Valentine Okolo


This paper seeks to assess the implications of bank consolidation on lending, which largely determine the survival and performance of small and medium scale enterprises and in turn the development of the Nigerian economy. Ordinary least square technique, correlation matrix test and Granger –causality test were employed to measure the extent to which lending to small and medium scale enterprises were influenced. The result showed that bank deposit (BD) impacted on lending to small and medium scale enterprises. Commercial and merchant bank lending rate had statistically insignificant effect on the dependent variable. There is a shift of focus by commercial banks from small and medium scale enterprises (small customers) to major investors (big customers). 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. The capital and deposits of micro finance bank should be boosted in order to effectively support small and medium scale enterprises through loans.

Keywords: Asset size, bank consolidation, lending, small and medium enterprises.

Digital Object Identifier (DOI):

Procedia APA BibTeX Chicago EndNote Harvard JSON MLA RIS XML ISO 690 PDF Downloads 2465


[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] Adegbaju A. A and Olokoyo F.O (2008), “Recapitalization and Banks’ Performance: A Case Study of Nigerian Banks”, African Economic and Business Review Vol. 6 No. 1.
[3] Adeyemi K. S. (2007), “Banking Sector Consolidation in Nigeria: Issues and Challenges,” Paper Presented in a Post-Consolidation Seminar, Union Bank of Nigeria Plc.
[4] Asikhia O.U (2009), “Market-focused strategic flexibility among Nigerian banks”. African Journal of Marketing Management, 2 (2): 018- 028.
[5] Ezeaku, V. (2010), “Banking in Nigeria: Consolidation of the Nigerian Banking Sector” European Journal Scientific Research.
[6] Graig S. G and Hardec P. (2004), “The Impact of Bank Consolidation on Small Business Credit Availability”, Journal of Economic.
[7] Kwan, S. (2004), Banking Consolidation Federal Reserve Bank of San Francisco (FRBSF), Economic Letter.
[8] Ningi S. I and Dutse A. Y (2008), “Impact of Bank Consolidation Strategy on the Nigerian Economy”, African Economic and Business Review Vol. 6, No. 2.
[9] Nnanna, O. J. (2006), “Beyond Bank Consolidation: The Impact of Society” A Paper Presented at the 4th Annual Monetary Policy Conference of the Central Bank of Nigeria, Abuja.
[10] Oboh, G. A. T. (2005), Selected Essays on Contemporary Issues in the Nigerian Banking System, Ibadan University Press.
[11] Odoko, F. O. (2008), “Beyond finance: Strategies for poverty reduction in Nigeria”. Central Bank of Nigeria Bullion, 31(1), 35-36.
[12] Oyewole O, (2008), “Bank capitalization in Nigeria: An empirical definition of a new millennium role”. Lagos: University of Lagos, Nigeria.
[13] Soludo, C.C (2004). Consolidating the Nigerian Banking Industry to Meet the Development Challenges of the 21st Century. Being an address delivered to the Special Meeting of the Bankers’ Committee, held on July 6, at the CBN Headquarter, Abuja.
[14] Somoye R.O. (2008), “Performances of Commercial Banks in Post Consolidation Period in Nigeria: An Empirical Review” Journal of Economics Finance and Administrative Sciences.
[15] Strahan, P E and J Weston (1996) Small Business Lending and Bank Consolidation, Is There Cause for Concern? Federal Reserve Bank Of New York Current issues In Economics and Finance.
[16] Uchendu, O. A. (2005). Banking Sector Reforms & Bank Consolidation: The Malaysian Experience. Bullion, 29(2).