Competiton and efficiency of commercial banks in Nigeria 1990-2008
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Date
2012
Authors
Journal Title
Journal ISSN
Volume Title
Publisher
Economics,Obafemi Awolowo University
Abstract
The study examined the relationship between the degree of competition and the level of efficiency of commercial banks in Nigeria from 1990 to 2008. The study also determines the degree of competition as well as the level of efficiency of commercial banks in the country.
Our study made use of secondary data obtained from the annual reports and financial statements of fifteen individual commercial banks in Nigeria, for the period 1990 – 2008. Both descriptive statistics and econometric techniques were employed in analysing our data. In the descriptive analysis, we made use of tables, charts, ratio and percentages, while in the econometric techniques; we measure competition by the Panzar –Rosse H-statistic, and measure the level of efficiency with the translog cost function of the stochastic frontier approach. The relationship between the degree of competition and the level of efficiency were analysed using the dynamic panel generalised method of moment with fixed effect.
The results showed that the Nigerian commercial bank is characterised by monopolistic competition with the value of H-statistic significantly different from zero for all the periods and sub-sample periods. The value ranges between 0.0925 and 0.1168. For the level of efficiency in the banking sector, the results showed that commercial banks in Nigeria are efficient in the observed sample period with mean efficiency value less than 0.3%. The results of the relationship between the degree of competition and the level of efficiency of commercial banks in Nigeria showed that competition is positive and significantly related to efficiency with a t-statistic of 2.4512 and coefficient of 0.1639 at 5% level of significance. This result was corroborated by the panel GMM which equally showed that competition influences efficiency in the Nigerian banking sector with a t-statistic value of 2.1584.
The study concluded that the degree of competition in the Nigerian banking sector is positively related to the level of efficiency, which corroborates the intuitive positive influence of competition on efficiency.
No of words: 320
Key words: competition, Efficiency, commercial banks, stochastic frontier, H-statistic.
Description
xv,178p
Keywords
Competition, Efficiency, Stochastic frontier, H-statistic., Commercial banks
Citation
Ajisafe,R.A(2012). Competiton and efficiency of commercial banks in Nigeria 1990-2008. Obafemi Awolowo University