Influence of Mergers and Acquisitions on Depositors’ Confidence in the Nigerian Banking Industry
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Abstract
This study examines the response of depositors’ confidence to mergers and acquisitions (M&As) in the Nigerian banking industry. Secondary data covering the period 1997 to 2013 was used. The regression output with the aid of SPSS software yields mixed results. While the confidence of the three classes of depositors, namely: private sector depositors, public sector depositors and total private-public sector depositors, show positive but insignificant response to M&As as proxied by merger dummy variable, it indicates positive and significant response to shareholders’ fund an alternate proxy for M &As. The paired student t-test shows significant response of confidence of the three classes of depositors to M & As. Overall, the findings suggest that the mergers and acquisitions have enhanced depositors’ confidence in the Nigerian banking industry. It is recommended inter-alia that banks should design products and services with mass appeal to their existing and prospective private sector customers in order to sustain and boost their enhanced confidence in the banking industry. This would translate to further increased deposit mobilization.
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References
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Adebayo, O. and Olalekan, O.(2012) An Analysis of the Impact of Mergers and Acquisitions on Commercial Banks Performance in Nigeria. Research Journal of Finance and Accounting,3(7).
Adegbaju, A. A. and Olokoyo, F. O. (2008) Recapitalization and Banks Performance: A Case Study of Nigerian Banks. African Economic and Business Review,6 (1).
Prompitak, D.(2009) The Impacts of Bank Mergers and Acquisitions (M&As) on Bank Lending Behaviour. University of Birmingham Research Archive e-thesis repository.
Riley, J. (2012). The Main Motives Behind Takeovers and Mergers. Retrieved from http://www.beta.tutor2u.net
Shier, R. (2004) Paired t-test. Retrieved from http://www.statstutor.ac.uk
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Ugwuanyi, G.O.(2014)Banking Distress and the Erosion of Public Confidence in the Nigerian Banking System. European Journal of Business and Management, 6 (9).
Ugwuanyi, G. O and Amanze, P. G.(2014)Banking Sector Reform: An Approach to Restoring Public Confidence on the Nigerian Banking Industry. Research Journal of Finance and Accounting , 5 ( 6).
Umoren, A.O., Oyerinde, D.T. & Olokoyo, F.O.(2007)Mergers and Acquisitions in Nigeria: Analysis of performance pre-and-post consolidation. Lagos Journal of Banking, Finance and Economic Issues, 1 (1).
Wesley, D.(2010)World Largest Mergers and Acquisitions Deals. Retrieved fromhttp://www.visualeconomics.creditloan.com.
Ilo, J.V.C, Okolo, V.C., and Ani, W.U. ( 2013, June ). The Effect of Bank Consolidation on Lending to Small and medium Scale Enterprises in Nigeria. Paper Presented at International Conference of Management, Malaysia. Retrieved from http://www.internationalconference.com.my
IMMA (2014) Top Ten Largest Mergers And Acquisitions Deals In History. Retrieved from
Jayadev, M. and Sensarma, R. (2007) Mergers in Indian Banking: An Analysis International. Journal of Financial Strategy.
Jindra, M.M.A.(2002) Synergy in Mergers and acquisitions: Theory and Practice In Central Europe. Retrieved from http://www.nb.vse.cz.
McCarthy, K.J. (2012). Mergers and Merger Waves: A Century of Cause and
Effects. Retrieved from http:// www.palgraveconnect.com.
Mcclure, B. (2014) Mergers and Acquisition: Definitions. Retrieved from
www.investopedia.com/university/mergers.
McGuckin, R. H. and Nguyen, S.V. (1995) On Productivity and Plant Ownership Change: New Evidence from the LRD. The Rand Journal of Economics, 26 (2), pp. 257-276.
Merritt, C. (2014). What Are the Three Different Types of Corporate Mergers & What Is the Rationale for Each Type? Retrieved from http://.smallbusiness.chron.com.
Motis, J.(2007). Merger and Acquisition Motives. Toulose School of Economics. Retrieved from http:// www.economics.soc.uoc.
Nwidobie, B.M.(2013)Bank Mergers and Acquisitions and Shareholders’ Wealth Maximization in Nigeria. Journal of Applied Finance & Banking, 3 (3) pp 255-270.
Nwokoji, C. (2015) Heritage bank transforming to a tier 1 lender. Nigerian Tribune (January 19).p.1 Retrieved from http://www.tribune.com.ng.
Nzotta, S. M. (2014) Money, Banking and Finance: Theory and Practice, Owerri, Nigeria, Good-Davis Associates.
Odetayo, T.A, Sajuyigbe, A.S. & Olowe, S.O. (2013) Empirical Analysis of the Impact of Post-Merger on Nigerian Banks Profitability. Research. Journal of Finance and Accounting, 4 (17).
Ogbochie, C.(2011, April 26) Matters arising on Mergers and Acquisition.
This Day (April 26).p.1. Retrieved from http://www.thisdaylive.com.
Okpanachi, J. (2011) Comparative Analysis of the Impact of Mergers and
Acquisitions on Financial efficiency Of Banks in Nigeria. Journal of
Accounting and Taxation, 3, pp.1-7
Ollinger, M. & Nguyen, S.V. (2003)Empirical Evidence on the Motives for Mergers and Acquisitions in Eight Food Industries. Agricultural and Applied
Economists Association 2003 Annual Meeting, July 27-30 Montreal, Canada.
Olugbenga, A.A, & Olusola, O.L.(2014).Synergistic Effect of Recent Mergers and Acquisitions in Nigerian Banking Industry. Developing CountryStudies,Vol.4, No,8
Olusola, O.A. and Olusola, O.J. (2012)Effects of Mergers and Acquisitions on
Returns to Shareholders of Conglomerates in Nigeria. Research Journal of Finance and Accounting. 3(7).
Owolabi,A. & Ajayi, N.O.(2013) Financial Efficiency in pre and post merger and Acquisition of banks in Nigeria. Journal of Global Business and Economic Research, 2(7), pp12-27.
Pandey,I.M.(1998) Financial Management (7th Revised Edition), New Delhi India Vikas Publishing House Pvt Ltd
Parikh, V. (2010). Differential Theory of Merger. Retrieved from
http://www.letslearnfinance.com.
Adegbie , F.F. & Adeniji, A.A.(2010)Mergers and Acquisitions in Nigerian banking: Imperative for Global Integration. Journal of Economy and Society, 10, Pp149-172
Adegboyega, O.I.(2013)Mergers and Acquisition and Banks Performance in Nigeria. JORIND, 10( 2), 159-308.
Afolabi, J.A (2011) Mergers and Acquisition in the Nigerian Banking System: Issues and Challenges. Nigeria Deposit Insurance Corporation Publication. Retrieved from www.ndic.gov.ng/files/challenges.
Ailemen, I.O.and Oyero, K.B.L(2013)The Effect of Merger on Deposit Money Banks Performance in the Nigerian Banking Industry. Journal of Applied Finance & Banking, vol. 3, no. 4, pp 105-123
Alade (2014) Cross-border Expansion of Nigerian banks: has it improved the continent’s regulatory and supervisory frameworks? Central Bank of Nigeria, BIS Paper 76. Retrieve from http://www.bis.org.
Ani,W.U; Odo, C. & Okelue, U.D.(2014) Ownership Structure Reform and Bank Performance in Nigeria. JORIND, 10(3).
Ani, W. U., Ugwunta, D. O., Ezeudu, I. J.1 and Ugwuanyi, G. O.(2012) An empirical assessment of the determinants of bank profitability in Nigeria: Bank characteristics panelevidence. Journal of Accounting and Taxation Vol. 4(3), pp. 38-43.
Ani, W. U. ,Ugwunta, D. O. and Ibe, G. O. (2012)The Effect of Bank Consolidation on Bank Cost Savings. Evidence from Selected Banks in Nigeria”. International Journal of Current Research, 4(3), pp.198-202.
Appah , E. and John, M. S. (2011)Mergers and Acquisitions in the Nigerian Banking Industry: An Explorative Investigation. Medwell Journal, 6 (3), pp 213-220.
Aregbeyen, O. and Olufemi, J.(2011)The Impact of Recapitalization and Consolidation on Banks Costs of Equity in Nigeria. Journal of International Business Management, 5, pp159-165.
Barnor, C. & Adu-Twumwaah , D( 2015) Bank Performance, Mergers and Acquisitions in Ghana: The Case of Ecobank Ghana -TTB Takeover and UT Financial Services – BPI Merger. International Journal of Sciences: Basic and Applied Research (IJSBAR) (2015) Volume 24, No 6, pp 77-91
CBN(2011) Questions and Answers on the CBN Policy on Cash Withdrawal/Lodgement Limit. Central Bank of Nigeria, Abuja. Retrieved from http://www.cenbank.org/Out/pressrelease.
Chima, O. (2013, March 27) KPMG: Nigeria Recorded $7.415bn M&A Deals in 2012. This Day (March 27), p.1. Retrieved from http://www.thisdaylive.com.
Devarajappa (2012) Mergers in Indian Banks: A Study On Mergers of HDFC Bank Ltd and Centurion Bank of Punjab Ltd International. Journal of Marketing, Financial Services & Management Research, 1(9).
Eboreime, I.M.(2009)Banking Distress, Consolidation and Economic Development in Nigeria. J. Res. National Dev., 7( 2).
EFInA (2015) Financial Inclusion in Nigeria. Retrieved from http://www.efina.org.ng
Egwuatu, P. (2015, January 02) NB confirms SEC approval of merger with Consolidated Breweries. Vanguard (January 02), p.1. Retrieved from http://www.vanguardngr.com.
Elgar, E. (2006) Efficiency Gains from Mergers. Retrieved from http://ec.europa.eu/edge.
Emejo, J. (2013 September) Access bank explains acquisition of Intercontinental. This day (September 22).p1. Retrieved from http://www.thisdaylive.com
Enyi, P. E.(2006) Banks Consolidation in Nigeria: A Synergistic Harvest. Retrieved from http://www.eprints.covenant university.edu.
Gehi, A. (2014) Types of Mergers and Acquisitions. Retrieved from
http://www.mergersandacquisitions.in
Idowu, O.F. (2012) Labor and Banking Sector Reforms in Nigeria. European Scientific Journal, 8 (9).
Ighomwenghian, K. (2012) Rating agencies applaud resilience of Nigerian banks.P1. Daily Independent (July 04). Retrieved from http://www.dailyindependentnig.com
Ike, N.N. and Ekpudu, J.E. (2010) The Impact of Bank Consolidation on the Nigerian Society. J. Res. National Dev.,8 (2).
Adebayo, O. and Olalekan, O.(2012) An Analysis of the Impact of Mergers and Acquisitions on Commercial Banks Performance in Nigeria. Research Journal of Finance and Accounting,3(7).
Adegbaju, A. A. and Olokoyo, F. O. (2008) Recapitalization and Banks Performance: A Case Study of Nigerian Banks. African Economic and Business Review,6 (1).
Prompitak, D.(2009) The Impacts of Bank Mergers and Acquisitions (M&As) on Bank Lending Behaviour. University of Birmingham Research Archive e-thesis repository.
Riley, J. (2012). The Main Motives Behind Takeovers and Mergers. Retrieved from http://www.beta.tutor2u.net
Shier, R. (2004) Paired t-test. Retrieved from http://www.statstutor.ac.uk
Soludo, C.C.(2006) The Outcome of the Banking Sector Recapitalization and the Way Forward for the Undercapitalized Banks. Being Press Conference by Governor of Central Bank of Nigeria, at the CBN Headquarters Abuja on January 16 to convey the outcome of the Banking Recapitalization. Retrieved from www.cenbank.org/OUT/SPEECHES/2006.
Soludo, C.C. (2004) Consolidating the Nigerian Banking Industry to Meet the Development Challenges of The 21st Century. Being an address delivered by the CBN Governor at the Special Meeting of the Bankers’ Committee, held on July 6, at the Central Bank of Nigeria Headquarters Abuja. Retrieved from www.cenbank.org/OUT/SPEECHES/2004
Ugwuanyi, G.O.(2014)Banking Distress and the Erosion of Public Confidence in the Nigerian Banking System. European Journal of Business and Management, 6 (9).
Ugwuanyi, G. O and Amanze, P. G.(2014)Banking Sector Reform: An Approach to Restoring Public Confidence on the Nigerian Banking Industry. Research Journal of Finance and Accounting , 5 ( 6).
Umoren, A.O., Oyerinde, D.T. & Olokoyo, F.O.(2007)Mergers and Acquisitions in Nigeria: Analysis of performance pre-and-post consolidation. Lagos Journal of Banking, Finance and Economic Issues, 1 (1).
Wesley, D.(2010)World Largest Mergers and Acquisitions Deals. Retrieved fromhttp://www.visualeconomics.creditloan.com.
Ilo, J.V.C, Okolo, V.C., and Ani, W.U. ( 2013, June ). The Effect of Bank Consolidation on Lending to Small and medium Scale Enterprises in Nigeria. Paper Presented at International Conference of Management, Malaysia. Retrieved from http://www.internationalconference.com.my
IMMA (2014) Top Ten Largest Mergers And Acquisitions Deals In History. Retrieved from
Jayadev, M. and Sensarma, R. (2007) Mergers in Indian Banking: An Analysis International. Journal of Financial Strategy.
Jindra, M.M.A.(2002) Synergy in Mergers and acquisitions: Theory and Practice In Central Europe. Retrieved from http://www.nb.vse.cz.
McCarthy, K.J. (2012). Mergers and Merger Waves: A Century of Cause and
Effects. Retrieved from http:// www.palgraveconnect.com.
Mcclure, B. (2014) Mergers and Acquisition: Definitions. Retrieved from
www.investopedia.com/university/mergers.
McGuckin, R. H. and Nguyen, S.V. (1995) On Productivity and Plant Ownership Change: New Evidence from the LRD. The Rand Journal of Economics, 26 (2), pp. 257-276.
Merritt, C. (2014). What Are the Three Different Types of Corporate Mergers & What Is the Rationale for Each Type? Retrieved from http://.smallbusiness.chron.com.
Motis, J.(2007). Merger and Acquisition Motives. Toulose School of Economics. Retrieved from http:// www.economics.soc.uoc.
Nwidobie, B.M.(2013)Bank Mergers and Acquisitions and Shareholders’ Wealth Maximization in Nigeria. Journal of Applied Finance & Banking, 3 (3) pp 255-270.
Nwokoji, C. (2015) Heritage bank transforming to a tier 1 lender. Nigerian Tribune (January 19).p.1 Retrieved from http://www.tribune.com.ng.
Nzotta, S. M. (2014) Money, Banking and Finance: Theory and Practice, Owerri, Nigeria, Good-Davis Associates.
Odetayo, T.A, Sajuyigbe, A.S. & Olowe, S.O. (2013) Empirical Analysis of the Impact of Post-Merger on Nigerian Banks Profitability. Research. Journal of Finance and Accounting, 4 (17).
Ogbochie, C.(2011, April 26) Matters arising on Mergers and Acquisition.
This Day (April 26).p.1. Retrieved from http://www.thisdaylive.com.
Okpanachi, J. (2011) Comparative Analysis of the Impact of Mergers and
Acquisitions on Financial efficiency Of Banks in Nigeria. Journal of
Accounting and Taxation, 3, pp.1-7
Ollinger, M. & Nguyen, S.V. (2003)Empirical Evidence on the Motives for Mergers and Acquisitions in Eight Food Industries. Agricultural and Applied
Economists Association 2003 Annual Meeting, July 27-30 Montreal, Canada.
Olugbenga, A.A, & Olusola, O.L.(2014).Synergistic Effect of Recent Mergers and Acquisitions in Nigerian Banking Industry. Developing CountryStudies,Vol.4, No,8
Olusola, O.A. and Olusola, O.J. (2012)Effects of Mergers and Acquisitions on
Returns to Shareholders of Conglomerates in Nigeria. Research Journal of Finance and Accounting. 3(7).
Owolabi,A. & Ajayi, N.O.(2013) Financial Efficiency in pre and post merger and Acquisition of banks in Nigeria. Journal of Global Business and Economic Research, 2(7), pp12-27.
Pandey,I.M.(1998) Financial Management (7th Revised Edition), New Delhi India Vikas Publishing House Pvt Ltd
Parikh, V. (2010). Differential Theory of Merger. Retrieved from
http://www.letslearnfinance.com.
Adegbie , F.F. & Adeniji, A.A.(2010)Mergers and Acquisitions in Nigerian banking: Imperative for Global Integration. Journal of Economy and Society, 10, Pp149-172
Adegboyega, O.I.(2013)Mergers and Acquisition and Banks Performance in Nigeria. JORIND, 10( 2), 159-308.
Afolabi, J.A (2011) Mergers and Acquisition in the Nigerian Banking System: Issues and Challenges. Nigeria Deposit Insurance Corporation Publication. Retrieved from www.ndic.gov.ng/files/challenges.
Ailemen, I.O.and Oyero, K.B.L(2013)The Effect of Merger on Deposit Money Banks Performance in the Nigerian Banking Industry. Journal of Applied Finance & Banking, vol. 3, no. 4, pp 105-123
Alade (2014) Cross-border Expansion of Nigerian banks: has it improved the continent’s regulatory and supervisory frameworks? Central Bank of Nigeria, BIS Paper 76. Retrieve from http://www.bis.org.
Ani,W.U; Odo, C. & Okelue, U.D.(2014) Ownership Structure Reform and Bank Performance in Nigeria. JORIND, 10(3).
Ani, W. U., Ugwunta, D. O., Ezeudu, I. J.1 and Ugwuanyi, G. O.(2012) An empirical assessment of the determinants of bank profitability in Nigeria: Bank characteristics panelevidence. Journal of Accounting and Taxation Vol. 4(3), pp. 38-43.
Ani, W. U. ,Ugwunta, D. O. and Ibe, G. O. (2012)The Effect of Bank Consolidation on Bank Cost Savings. Evidence from Selected Banks in Nigeria”. International Journal of Current Research, 4(3), pp.198-202.
Appah , E. and John, M. S. (2011)Mergers and Acquisitions in the Nigerian Banking Industry: An Explorative Investigation. Medwell Journal, 6 (3), pp 213-220.
Aregbeyen, O. and Olufemi, J.(2011)The Impact of Recapitalization and Consolidation on Banks Costs of Equity in Nigeria. Journal of International Business Management, 5, pp159-165.
Barnor, C. & Adu-Twumwaah , D( 2015) Bank Performance, Mergers and Acquisitions in Ghana: The Case of Ecobank Ghana -TTB Takeover and UT Financial Services – BPI Merger. International Journal of Sciences: Basic and Applied Research (IJSBAR) (2015) Volume 24, No 6, pp 77-91
CBN(2011) Questions and Answers on the CBN Policy on Cash Withdrawal/Lodgement Limit. Central Bank of Nigeria, Abuja. Retrieved from http://www.cenbank.org/Out/pressrelease.
Chima, O. (2013, March 27) KPMG: Nigeria Recorded $7.415bn M&A Deals in 2012. This Day (March 27), p.1. Retrieved from http://www.thisdaylive.com.
Devarajappa (2012) Mergers in Indian Banks: A Study On Mergers of HDFC Bank Ltd and Centurion Bank of Punjab Ltd International. Journal of Marketing, Financial Services & Management Research, 1(9).
Eboreime, I.M.(2009)Banking Distress, Consolidation and Economic Development in Nigeria. J. Res. National Dev., 7( 2).
EFInA (2015) Financial Inclusion in Nigeria. Retrieved from http://www.efina.org.ng
Egwuatu, P. (2015, January 02) NB confirms SEC approval of merger with Consolidated Breweries. Vanguard (January 02), p.1. Retrieved from http://www.vanguardngr.com.
Elgar, E. (2006) Efficiency Gains from Mergers. Retrieved from http://ec.europa.eu/edge.
Emejo, J. (2013 September) Access bank explains acquisition of Intercontinental. This day (September 22).p1. Retrieved from http://www.thisdaylive.com
Enyi, P. E.(2006) Banks Consolidation in Nigeria: A Synergistic Harvest. Retrieved from http://www.eprints.covenant university.edu.
Gehi, A. (2014) Types of Mergers and Acquisitions. Retrieved from
http://www.mergersandacquisitions.in
Idowu, O.F. (2012) Labor and Banking Sector Reforms in Nigeria. European Scientific Journal, 8 (9).
Ighomwenghian, K. (2012) Rating agencies applaud resilience of Nigerian banks.P1. Daily Independent (July 04). Retrieved from http://www.dailyindependentnig.com
Ike, N.N. and Ekpudu, J.E. (2010) The Impact of Bank Consolidation on the Nigerian Society. J. Res. National Dev.,8 (2).