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Causes and impacts of global financial crisis on the performance of Nigerian banks (a case study of selected banks)

Taiwo Olaniyi and Yetunde Olabisi
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Taiwo Olaniyi: Department of Accounting and Finance University of Ilorin, Ilorin, Nigeria.
Yetunde Olabisi: Department of Accounting and Finance University of Ilorin, Ilorin, Nigeria.

E3 Journal of Business Management and Economics., 2011, vol. 2, issue 4, 164-170

Abstract: Incessant bank failure in the face of several banking policies calls for appropriate prophylactic measures capable of stemming the tide because the pain of bank failure touches the banker, customer, government and the general public as well. Thus, when the global financial crisis came, it destabilized the expected return of the consolidation exercise of 2005 which seriously affected the operation of Nigerian banks. This study evaluates the causes and implications of the global financial crisis on the performance of Nigerian banks with a view to determine the extent of this impact and determining various options that could cushion the impact as well as avoiding future reoccurrence. The secondary data used in this study are those relating to loans and advances, customers deposit and investment in securities (independent variable), while the dependent variable is bank performance. Ordinary Least Square method of Multiple Regression Analysis was used to manipulate the time series data into Econometric model of inflation, while F test was used to test the formulated hypotheses. This study reveals that global financial crisis has a negative impact on the performance of Nigerian banks despite in defiance of high liquidity possessed by these banks immediately after the consolidation exercise of 2005. It was recommended that banks should desist from financing other banks’ investment in securities to avoid multiplier effect syndrome while the Nigerian government should find alternative ways to fund their budget deficit

Keywords: Banking policies; Loans and Advances; Securities; Liquidity; Consolidation; Lending rates; Deposit rate. (search for similar items in EconPapers)
Date: 2011-10
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