The Technical Efficiency of Nigerian Banks

Journal Title: Asian Economic and Financial Review - Year 2012, Vol 2, Issue 2

Abstract

This study provides an insight into the technical efficiency of Nigerian banks. The Data Envelopment Analysis (DEA) approach was employed to derive the efficiency scores of the various banks. A total of 67 banks, made up of commercial and merchant banks were used for the periods 1984/1985, 1994/1995, 1999/2000, and 2003/2004. This enabled us to investigate the efficiency of these banks pre- and- post liberalization. However, the periods were before the consolidation exercise of the Central Bank of Nigeria (CBN) headed by both Soludo and Sanusi. This enabled us compare the results with the outcome of those consolidation exercises. The result shows that on the average Nigerian banks were not efficient within the periods of study. However, it showed that liberalization improved the efficiency of banks in Nigeria, though the improvement did not last as some of the banks started sliding in efficiency with continued liberalization. This tends to support the consolidation exercises which were actions taken along with the liberalization exercise to save the banks. Furthermore, the study shows that some of the banks that collapsed during the 2006 consolidation exercise had their efficiencies continuously on the decline. Same with some of the banks that were declared problematic by Sanusi. It also showed that privately owned banks were found to be more efficient than publicly owned banks within the period of study. This suggests that continued privatization should be pursued in the banking industry.

Authors and Affiliations

Frances N. Obafemi| Department of Economics, University of Calabar, Calabar, Nigeria

Keywords

Related Articles

ASSESSMENT OF BUDGET SUSTAINABILITY IN SARAWAK

This study reexamines the sustainability of budget stance of Sarawak state, 1970-2008. Using the intertemporal borrowing constraint as a framework, the study tests the long-run relationship between government revenue and...

TRANSACTION COSTS, MULTIPLE EQUILIBRIA, AND CURRENCY DEVALUATION

This paper attempts to examine the effect of a currency devaluation on domestic output by incorporating the Coase (1937) assertion into a standard open economy model. Our results show that there will be multiple equilibr...

DOES MONETARY POLICY INFLUENCE ECONOMIC GROWTH IN NIGERIA?

This study examines the impact of monetary policy on economic growth in Nigeria.The study uses time-series data covering the range of 1975 to 2010.The effects of stochastic shocks of each of the endogenous variables are...

NONLINEAR ANALYSIS OF ECONOMIC GROWTH, PUBLIC DEBT AND POLICY TOOLS

This paper empirically analyzes the nonlinear relation between real GDP growth per capital and public debt by employing ADL test for threshold cointegration method. Empirical results show that there exists a threshold co...

WAGNER’S LAW IN SAUDI ARABIA 1970 - 2012: AN ECONOMETRIC ANALYSIS

Our goal in this paper is to explorethe validity of Wagner’s Law in Saudi Arabia during the period (1970-2012) for real oil GDP and Non-oil GDP.Wagner’s Law investigated that fundamental economic growth is validity to th...

Download PDF file
  • EP ID EP1784
  • DOI -
  • Views 548
  • Downloads 34

How To Cite

Frances N. Obafemi (2012). The Technical Efficiency of Nigerian Banks. Asian Economic and Financial Review, 2(2), 407-420. https://europub.co.uk/articles/-A-1784