IDEAS home Printed from https://ideas.repec.org/a/rbs/ijfbss/v5y2016i4id342.html

How is Size Related to Profitability? Post-Consolidation Evidence from Selected Banks in Nigeria

Author

Listed:
  • Funso Kolapo
  • Lawrence Ajayi
  • Olufemi Aluko

Abstract

It is theoretically believed that increase in firm size would result to increase in firm profitability. Therefore, this study examines the relationship between size and profitability of six banks in Nigeria after the 2005 consolidation exercise. The measure of profitability is return on assets. Employing the static panel data regression method, the study found that size has an insignificant negative relationship with bank profitability. This study concludes that the 2005 consolidation exercise did not enhance the profitability of the selected banks.

Suggested Citation

  • Funso Kolapo & Lawrence Ajayi & Olufemi Aluko, 2016. "How is Size Related to Profitability? Post-Consolidation Evidence from Selected Banks in Nigeria," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 5(4), pages 30-38, July.
    • Handle: RePEc:rbs:ijfbss:v:5:y:2016:i:4:id:342
    DOI: 10.20525/ijfbs.v5i4.592
    as

    Download full text from publisher

    File URL: https://ssbfnet.com/ojs/index.php/ijfbs/article/view/342
    File Function: Abstract page
    Download Restriction: no
    File URL: https://ssbfnet.com/ojs/index.php/ijfbs/article/download/342/321
    File Function: Full text
    Download Restriction: no
    File URL: https://libkey.io/10.20525/ijfbs.v5i4.592?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Smirlock, Michael, 1985. "Evidence on the (Non) Relationship between Concentration and Profitability in Banking," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 17(1), pages 69-83, February.
    2. Allen Berger, 2000. "The Integration of the Financial Services Industry," North American Actuarial Journal, Taylor & Francis Journals, vol. 4(3), pages 25-45.
    3. Allen N. Berger, 2000. "The integration of the financial services industry: where are the efficiencies?," Finance and Economics Discussion Series 2000-36, Board of Governors of the Federal Reserve System (U.S.).
    4. Jalal D. Akhavein & Allen N. Berger & David B. Humphrey, "undated". "The Effects of Megamergers on Efficiency and Prices: Evidence from a Bank Profit Function," Finance and Economics Discussion Series 1997-09, Board of Governors of the Federal Reserve System (U.S.), revised 10 Dec 2019.
    5. Tomola M. Obamuyi & Sola Olorunfemi, 2011. "Financial reforms, interest rate behaviour and economic growth in Nigeria," Journal of Applied Finance & Banking, SCIENPRESS Ltd, vol. 1(4), pages 1-2.
    6. Park, Kang H. & Weber, William L., 2006. "Profitability of Korean banks: Test of market structure versus efficient structure," Journal of Economics and Business, Elsevier, vol. 58(3), pages 222-239.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Funso T. Kolapo & Lawrence B. Ajayi & Olufemi A. Aluko, 2016. "How is Size Related to Profitability? Post-Consolidation Evidence from Selected Banks in Nigeria," International Journal of Finance & Banking Studies, Center for the Strategic Studies in Business and Finance, vol. 5(4), pages 30-38, July.
    2. SGHAIER Asma & LAHDHIRI Manelle, 2014. "The Efficiency’s Analysis of Islamic Banks in Mena Countries: Trends and Perspectives," Indian Journal of Commerce and Management Studies, Educational Research Multimedia & Publications,India, vol. 5(1), pages 36-46, January.
    3. Amel, Dean & Barnes, Colleen & Panetta, Fabio & Salleo, Carmelo, 2004. "Consolidation and efficiency in the financial sector: A review of the international evidence," Journal of Banking & Finance, Elsevier, vol. 28(10), pages 2493-2519, October.
    4. Diaz, Belen Diaz & Olalla, Myriam Garcia & Azofra, Sergio Sanfilippo, 2004. "Bank acquisitions and performance: evidence from a panel of European credit entities," Journal of Economics and Business, Elsevier, vol. 56(5), pages 377-404.
    5. Neale Faith R. & Drake Pamela Peterson & Clark Steven P., 2010. "Diversification in the Financial Services Industry: The Effect of the Financial Modernization Act," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 10(1), pages 1-30, March.
    6. Marcel Canoy & Machiel van Dijk & Jan Lemmen & Ruud de Mooij & Jürgen Weigand, 2001. "Competition and stability in banking," CPB Document 15.rdf, CPB Netherlands Bureau for Economic Policy Analysis.
    7. Panagiotis Staikouras & Christos Staikouras & Maria-Eleni Agoraki, 2007. "The effect of board size and composition on European bank performance," European Journal of Law and Economics, Springer, vol. 23(1), pages 1-27, February.
    8. Md. Shabbir Alam & Mustafa Raza Rabbani & Mohammad Rumzi Tausif & Joji Abey, 2021. "Banks’ Performance and Economic Growth in India: A Panel Cointegration Analysis," Economies, MDPI, vol. 9(1), pages 1-13, March.
    9. Greg Niehaus & Jannes Rauch & Sabine Wende, 2019. "Regulation and the connectedness of insurers to the banking sector: International evidence," Risk Management and Insurance Review, American Risk and Insurance Association, vol. 22(4), pages 393-420, December.
    10. Fazelina Sahul Hamid, 2017. "The Effect of Market Structure on Banks’ Profitability and Stability: Evidence from ASEAN-5 Countries," International Economic Journal, Taylor & Francis Journals, vol. 31(4), pages 578-598, October.
    11. Yao, Meifang & Di, He & Zheng, Xianrong & Xu, Xiaobo, 2018. "Impact of payment technology innovations on the traditional financial industry: A focus on China," Technological Forecasting and Social Change, Elsevier, vol. 135(C), pages 199-207.
    12. Berger, Allen N. & Demsetz, Rebecca S. & Strahan, Philip E., 1999. "The consolidation of the financial services industry: Causes, consequences, and implications for the future," Journal of Banking & Finance, Elsevier, vol. 23(2-4), pages 135-194, February.
    13. Pankaj Sinha & Sakshi Sharma, 2016. "Determinants of bank profits and its persistence in Indian Banks: a study in a dynamic panel data framework," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 7(1), pages 35-46, March.
    14. Michael K. McShane & Larry A. Cox, 2009. "Issuance Decisions and Strategic Focus: The Case of Long‐Term Care Insurance," Journal of Risk & Insurance, The American Risk and Insurance Association, vol. 76(1), pages 87-108, March.
    15. Qichang Ye & Zongling Xu & Dan Fang, 2012. "Market structure, performance, and efficiency of the Chinese banking sector," Economic Change and Restructuring, Springer, vol. 45(4), pages 337-358, November.
    16. Cummins, J. David & Rubio-Misas, Maria, 2006. "Deregulation, Consolidation, and Efficiency: Evidence from the Spanish Insurance Industry," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 38(2), pages 323-355, March.
    17. Athanasoglou, Panayiotis P. & Brissimis, Sophocles N. & Delis, Matthaios D., 2008. "Bank-specific, industry-specific and macroeconomic determinants of bank profitability," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 18(2), pages 121-136, April.
    18. Kozak Sylwester & Wierzbowska Agata, 2021. "Banking Market Concentration and Bank Efficiency. Evidence from Southern, Eastern and Central Europe," South East European Journal of Economics and Business, Paradigm, vol. 16(1), pages 38-52, June.
    19. Homma, Tetsushi & Tsutsui, Yoshiro & Uchida, Hirofumi, 2014. "Firm growth and efficiency in the banking industry: A new test of the efficient structure hypothesis," Journal of Banking & Finance, Elsevier, vol. 40(C), pages 143-153.
    20. Korhonen, Pekka & Koskinen, Lasse & Voutilainen, Raimo, 2006. "A financial alliance compromise between executives and supervisory authorities," European Journal of Operational Research, Elsevier, vol. 175(2), pages 1300-1310, December.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rbs:ijfbss:v:5:y:2016:i:4:id:342. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Hasan Dincer (email available below). General contact details of provider: https://edirc.repec.org/data/ssbffea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.