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Effects of Global Decline in Oil Price on the Financial Performance of selected Deposit Money Banks in Nigeria

Author

Listed:
  • Godswill Osagie Osuma

    (Department of Banking and Finance, Covenant University, Nigeria.)

  • Abiola Ayopo Babajide

    (Department of Banking and Finance, Covenant University, Nigeria.)

  • Ochei Ailemen Ikpefan

    (Department of Banking and Finance, Covenant University, Nigeria.)

  • Emeka Bennett Nwuba

    (Department of Banking and Finance, Covenant University, Nigeria.)

  • Pelumi Wuraola Jegede

    (Department of Banking and Finance, Covenant University, Nigeria.)

Abstract

The global decline in oil price have had a significant effect on the Nigerian economy especially the banking sector and this has led to some banks; revenue shortfalls, increase in their non-performing loans, layoff of staff, decrease in the bank deposit base, deterioration of the bank's asset quality, reduction in the banks ticket transactions e.tc. Therefore, the main objective of this research is to examine the effects of the global decline in oil price on the Nigerian banking sector. Descriptive statistics and Simple linear regression was used as a tool for data analysis which was run with a pool ordinary least square (OLS) and the findings revealed that there exists a positive and significant relationship between oil prices and the financial performance (three key performance index were used to measure performance such as; profit after tax, current ratio, and net interest margin) of the banks especially in the period characterized by the decline in oil price. This paper, therefore, recommends that the government should take proactive steps to revamp the Agricultural sector by empowering our local farmers while commercial farming should be encouraged. Banks should endeavor to imbibe diversification of their investments and engage in financial innovation in other to improve their performance so as to enable them to be competitive globally.

Suggested Citation

  • Godswill Osagie Osuma & Abiola Ayopo Babajide & Ochei Ailemen Ikpefan & Emeka Bennett Nwuba & Pelumi Wuraola Jegede, 2019. "Effects of Global Decline in Oil Price on the Financial Performance of selected Deposit Money Banks in Nigeria," International Journal of Energy Economics and Policy, Econjournals, vol. 9(3), pages 187-195.
    • Handle: RePEc:eco:journ2:2019-03-22
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    References listed on IDEAS

    as
    1. Aliyu, Shehu Usman Rano, 2009. "Impact of Oil Price Shock and Exchange Rate Volatility on Economic Growth in Nigeria: An Empirical Investigation," MPRA Paper 16319, University Library of Munich, Germany, revised 10 Jun 2009.
    2. Unknown, 2016. "Energy for Sustainable Development," Conference Proceedings 253270, Guru Arjan Dev Institute of Development Studies (IDSAsr).
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    Cited by:

    1. Benjamin Ighodalo Ehikioya & Alexander Ehimare Omankhanlen & Ayopo Abiola Babajide & Godswill Osagie Osuma & Cordelia Onyinyechi Omodero, 2020. "Oil Price Fluctuations and Exchange Rate in Selected Sub-Saharan Africa countries: A Vector Error Correction Model Approach," International Journal of Energy Economics and Policy, Econjournals, vol. 10(6), pages 242-249.
    2. Patrick Omoruyi Eke & B. Uzoma Achugamonu & Simon Yunisa & Godswill Osagie Osuma, 2020. "Macroeconomic risks and financial sector stability: the Nigerian case," DECISION: Official Journal of the Indian Institute of Management Calcutta, Springer;Indian Institute of Management Calcutta, vol. 47(3), pages 233-249, September.
    3. Nenubari John Ikue & Lamin Mohammed Magaji & Samuel Zeb-Omoni & Mohammed, Aminu Usman & Joseph Osaro Denwi, 2021. "Trade Balance and Oil Shocks in African Oil Exporting Countries: A Panel Threshold Regression," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 10(4), pages 150-166, October.
    4. Ochei Ailemen Ikpefan & Godswill Osagie Osuma & Tersoo Ahire & Grace Evbuomwan & Bayo Oyero Kazeem & Peace Chimezie, 2021. "Working Capital Management and Performance of Six Deposit Money Banks in Nigeria," Asian Economic and Financial Review, Asian Economic and Social Society, vol. 11(6), pages 418-428, June.

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    More about this item

    Keywords

    Oil price; Syndicated loans; Oil and gas sector; Profitability; Deposit money banks;
    All these keywords.

    JEL classification:

    • Q40 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - General
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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