Finance Act 2020 and Stability of Nigerian Banks

PhD Clement Adewole, John Damak and Victor Odumu
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PhD Clement Adewole: Department of Banking and Finance University of Jos, Nigeria
John Damak: Department of Banking and Finance University of Jos, Nigeria
Victor Odumu: Department of Banking and Finance University of Jos, Nigeria

International Journal of Research and Innovation in Social Science, 2021, vol. 5, issue 11, 331-341

Abstract: The health of financial institutions in Nigeria at any point in time revolves around the policies enacted by regulatory authorities. Furthermore, other factors that militate against ability of the regulatory authorities are political interference, instability, corruption and inconsistent monetary and fiscal policies. Interestingly, Nigeria introduced the Tax and Fiscal Law amendments bill (The Finance Act 2020) to address obsolete tax laws and align these laws with global best practices. This study did an appraisal of the implication of the Finance Act 2020 on the stability of banks in Nigeria. The study adopted a descriptive research design, a nonprobability judgment sample of 127 participants who are employees of 5 deposit money banks in Jos, the Plateau state capital. These bank employees responded to a re-validated 5 points Likert scale questionnaire. Data were analysed using quantitative techniques of spearman ranking correlation with aid of SPSSv25 to test the hypotheses. Results of statistical data analyses showed that CGTA Reform has significant effect on bank stability; CITA Reform has significant effect bank stability; and VATA Reform has significant effect on bank stability. The study concluded that a probable cause of the statistically significant positive relationships among the variables is the enormous potential benefits that comes with the reformed tax laws. The study recommended that some provisions of the Finance Act should be clear enough for individuals to understand tax laws, corporate taxes should be reduced to encourage corporate investment and then lastly it recommended that fiscal authorities should expand its VAT exempt list to include some services provided by banks in Nigeria which would ensure bank stability in Nigeria.

Date: 2021
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