Empirical Assessment on Financial Regulations and Banking Sector Performance

Open access

Abstract

This study examines financial regulation and banking sector performance in Nigeria. Specifically, the study determines the impact of reforms on banking sector performance and also assesses the nexus between capital adequacy and banking sector performance. Time series data for the period 1993 to 2014 was used. As an analytical tool, the study uses unit root test to determine the stationary state of the variables. We also employed the Johansson co-integration and error correction model (ECM) statistical techniques to establish both short-run and long-run dynamic relationships between the endogenous and exogenous variables. The empirical findings indicate that financial regulation significantly impacts the banking sector performance while financial regulation has both short-run and long-run dynamic relationships with the banking sector performance in Nigeria. It was found that the four-period lag of capital adequacy negatively affects banking sector performance and is not statistically significant. The paper suggests that the Central Bank of Nigeria (CBN) should continually make public the impacts that the various financial regulations and reforms have on the performance of Nigerian banks. Majority of the policies on financial regulation by the apex bank (CBN) need to be long-run which can enable confidence of stakeholders, shareholders and the general public in the Nigerian banking industry when critically evaluated.

If the inline PDF is not rendering correctly, you can download the PDF file here.

  • 1. Aguwamba S. A. Ogbeifun O. R. and Ekienabor E. (2016). Impact of World Bank international development association and international finance corporation on the Nigerian economy (1990-2010) International Journal of Scientific and Research Publications 6(6) pp. 623-630.

  • 2. Andabai P. W. (2010). Bank consolidation and the performance of Nigerian economy between 2004 - 2009. International Journal of Business and Common Market Studies 7(1 & 2) pp. 54-66.

  • 3. Enendu C.I. Abba M.A. Kure E.U. Bewaji P.N. Nwosu C.P. Ben-obi O.A. Adigun M.A. Elisha J.D. Okoro A.E. and Ukeje N. H (2013). Bank intermediation in Nigeria. Journal of Financial Management 10(7) pp. 101-117.

  • 4. Ezike J. E. (2013). Capital adequacy standards Basle Accord and bank performance: The Nigerian Experience (A case study of selected banks in Nigeria). Asian Economic and Financial Review 3(2) pp. 146 - 159.

  • 5. Fadare S. O. (2010). Recent banking sector reforms and economic growth in Nigeria. Middle Eastern Finance and Economics. Journal of Economics 14(3) pp. 20-45.

  • 6. Igbinosa S. O. and Ogbeide S. A. (2016). Banking sector development and performance of the Nigerian economy. International Journal of Research 1(1) pp. 13-34.

  • 7. Imad R. Z. Qais. K. A. and Thair. K. A (2011). Determinants of Bank Profitability: Evidence from Jordan. International Journal of Academic Research. 3(4) pp. 180-191.

  • 8. Johansen S. (1988). Statistical Analysis of Cointegration Vectors. Journal of Economic Dynamics and Control 12(2-3) pp. 231-254.

  • 9. Javaid S. Anwar J. Zaman. K and Ghafoor A. (2011). Determinants of Bank Profitability in Pakistan: Internal Factor Analysis Journal of Yasar University. 23(6) pp. 3794-3804.

  • 10. Olalekan A. and Adeyinka S. (2013). Capital adequacy and banks’ profitability: an empirical evidence from Nigeria. American Journal of Contemporary Research 3(10) pp. 1-7.

  • 11. Omankhanlen A. R. (2012). The financial sector reforms and their effect on the Nigerian economy. Economy Trendsisciplinary Cognition 15(2) pp. 45 - 57.

  • 12. Rose P. S. and Hudgins S. C. (2005). Bank Management and Financial Service. New York: McGraw Hill.

  • 13. Shittu A. I. (2012). Financial intermediation and economic growth in Nigeria. British Journal of Arts and Social Sciences 4(2) pp. 164-179.

Search
Journal information
Impact Factor


CiteScore 2018: 0.83

SCImago Journal Rank (SJR) 2018: 0.23
Source Normalized Impact per Paper (SNIP) 2018: 0.902

Cited By
Metrics
All Time Past Year Past 30 Days
Abstract Views 0 0 0
Full Text Views 496 262 12
PDF Downloads 327 197 11