Nigerian Banking Economy Response to The Economic Meltdown


Author(s):
Adebayo Moses; Adegbite T.A.

Abstract:
This study observed the response of banking economy to the economic meltdown as justified by the means of technical, allocative and cost efficiency of the Nigerian commercial Bank between the years 2002 to 2011. Ten Nigerian Banks were randomly selected out of 15 banks quoted in Nigeria. For this intention, the Data Envelopment Analysis (DEA) model was used. Having got the results of the analysis, some banks were found perfectly efficient with efficiency scores of 1.000 meaning (100%) efficiency, whereas those that were below 1.000 were not fully efficient. The mean technical efficiency, allocative efficiency and cost efficiency for the period examined stood at 0.938 (93.8%), 0.896 (89.6%), 0.844 (84.4%) respectively.  These mean results depict the fact that Nigerian banking sector generally needs managerial attention beyond the emphasis on continual banking reforms of recapitalization, merger and acquisition and the likes, so as to be ranked with the global perspective. The banking economy response to the meltdown is noticeable on the graph drown through the mean results of the technical, allocative and cost efficiency being glaringly understood through the graph that 2008, 2009 and part of 2010 were noticed for the gross effects of the meltdown on the banking economy, though the mild effect is still being felt till 2013 but not pronounced as such.

Keywords:
evaluation, technical efficiency, allocative efficiency cost efficiency, financial intermediation, banking sector, economic meltdown

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