Effects of the Nigerian Banking Consolidation on Competition

Abstract

Purpose – The chapter seeks to examine the changing nature of competition during and immediately after the consolidation within the context of Nigerian banking sector reform.

Design/methodology/approach – The chapter deploys the Herfindahl–Hirschman Index, interest rate spread and conducted interviews with senior bank managers to test the hypothesis that there was no change in competition.

Findings – The results obtained support the CBN's expectation of sustained competition and higher efficiency levels, resulting in a minimal reduction of interest rate spread.

Originality/value – This is the first study that examines the changing nature of competition resulting from the 2004–2006 Nigerian banking consolidation.

Citation

Okafor, C., Russell, K. and Lawal, L. (2012), "Effects of the Nigerian Banking Consolidation on Competition", Menyah, K. and Abor, J. (Ed.) Finance and Development in Africa (Research in Accounting in Emerging Economies, Vol. 12 Part B), Emerald Group Publishing Limited, Leeds, pp. 75-96. https://doi.org/10.1108/S1479-3563(2012)000012B008