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CROSS BORDER BANKING AND BANK PERFORMANCE: THE NIGERIA CASE

Joy Omeghie Osemwegie-Ero
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Joy Omeghie Osemwegie-Ero: Benson Idahosa University, Postal: Department of Accounting, Benin City, Edo State, Nigeria

International Journal of Accounting and Finance (IJAF), 2019, vol. 08, issue 2, 114-141

Abstract: Considering that about sixty-four percent of the current fourteen deposit money banks quoted in the Nigeria Stock Exchange are into cross-border banking, there is need to evaluate their performances vis-à-vis their domestic counterparts. The unresolved empirical evidence as to whether or not the Nigerian cross-border banks are more profitable than the local banks, as well as the extent to which cross borderbank explains the variation in bank profitability, liquidity and stock performance – formed the core motivations behind this study. The census method was employed by sampling the entire fourteen (14) quoted deposit money banks as at yearended 2016. Secondary data was used, and this was extracted from the annual financial statements ofthe banks fora period ofsixteen (16) yearperiod (2001-2016). The study evaluated the banks' performances using three (3) performance indicator metrics – profitability, liquidity and stock price. The study employed the use of descriptive statistics, correlation matrix, multivariate (panelregression) andpairedsample t-testforthe data analyses. Overall, our results only showed an improvement in the post-CB eras ofliquidity though further tests did not show any significant difference in liquidity performance. Thus, as far as the comparison ofthe performance ofthe Nigerian CB banks is concerned - eitherwith theirdomestic counterparts orbefore and after they engaged in cross-border banking, it can be concluded that one of the performance indices employed in this study (profitability) improved in absolute terms in favour ofCB banks as well as on the post cross-border era. The study recommends, among others, that the management of cross-border Nigerian banks should sustain their presence in foreign countries where they are more profitable in order to maximize their risk diversification potentials and the overall performance of the bank.

Keywords: Cross-border; Banks; Nigeria Stock Exchange; Liquidity; Profitability and shares. (search for similar items in EconPapers)
Date: 2019
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