Short Term Effect of the 2006 Consolidation on Profitability of Nigerian Banks
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Date
2009
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Nigeria Research Journal of Accountancy (NRJA)
Abstract
Is there any significant change (increase) in the profitability of Nigerian banks three years after the January 1.2006 consolidation exercise? This paper used Return On Equity (ROE) as a measure of profitability. It examined the ROE of fifteen (15) out of the remaining 24 post consolidation "mega" banks. The banks examined are those that fairly retained their identities before and after the consolidation exercise The three year (2003-2005) pre-consolidation mean of ROE of the banks was compared with the three-year (2006 2008) mean of post consolidation period. Using descriptive (narrative) method and the sample t-test statistic, it was found that there is a significant increase in the profitability of only four of the banks and a significant decrease in the profitability of the rest. The findings here confirm the existing belief in some quarters that new generation banks and the upcoming ones are more aggressive in their profit drive than their old generation counterparts.