Portfolio Diversification and Performance of Deposit Money Banks: Analysing the Nigerian Banking Industry

The focus is on Portfolio Diversification and Performance of Deposit Money Banks: analyzing the Nigerian banking industry for the period 1990-2019. The study measured treasury bills, ordinary shares, investments in subsidiaries, and foreign investments outside Nigeria as proxies for Portfolio Diversification while Return on Equity as proxy for performance of deposit money banks for the periods under review. In the course of the study, data were obtained from the website of Central Bank Statistical bulletin and annual report of Nigerian Deposit Insurance Corporation (NDIC). The Augmented Dickey Fuller (ADF) test option was used to test for unit roots. The ARDL and Bounds test were used to estimate the short and long run relationships respectively. The study discovered that at short run, treasury bills, and ordinary shares are negatively related and not significantly related to return on equity while investments in subsidiaries and foreign balances outside Nigeria are positively related to return on equity of DMBs at most lag periods. However, it was further observed that at different lag periods the variables do not significantly predict the direction of return on equity of DMBs. Long run relationship was also observed to exist amid treasury bills, acquisition of ordinary shares, investment in subsidiaries, ,foreign investments outside Nigeria and performance of all deposit money banks in Nigeria for the period 1990 – 2019.at short run, DMBs should diversify into investments in subsidiaries , as this would improve return on equity. Deposit Money Banks should also diversify into foreign holdings that would yield positive net present values. Deposit money Banks in Nigeria should diversify into foreign investments with the right mix that would increase performance. These were some of the recommendations proffered, to the Government, monetary authorities, Central Bank of Nigeria, researchers and Deposit Money Banks in Nigeria.

Identity Management Reform and Fraud Prevention in the Nigerian Banking Industry

This paper assesses the effect ofidentity management reform, namely the Bank verification number (BVN) policy on fraud prevention in the Nigerian banking industry. Using secondary data obtained from annual reports of Nigerian Deposit Insurance Corporation (NDIC) from 2011 to 2018, the study employed descriptive method to analyze trend in fraud variables before and after introduction of the policy and independent t-test to test the hypotheses in the study. Findings revealed that there was an initial decrease in number of staff involved and total amount involved in fraud in the two years following BVN introduction, but which showed increases thereafter.A similar trend was revealed in various fraud types with internet banking fraud showing significant increases in frequency of cases. The results from the t-tests revealed that theBVN policy had no significant impact on fraud prevention within the period under study. It was recommended that the banking public be educated on the different types of fraud and how to protect their personal details from getting into wrong hands. There is also the need to beef up security by improving on protocols required to carry out bank transactions particularly in the area of internet banking. It was also suggested that all bank account numbers be linked to the National Identity Number (NIN) immediately in line with proposals made by the Federal Government on identity management.

Modelling Macroeconomic and Bank-Specific Determinants of Credit Risk in the Nigerian Banking Sector: Evidence from Bounds Test Approach to Co-Integration

Credit risk, represented in this study by the ratio of non-performing loans to total loan (NPL), is considered as one of the critical factors that causes bank distress and failure. This study examines the macroeconomic and bankspecific determinants of credit risk in the Nigerian Banking sector from the period 1998Q1 to 2018Q4 using the bounds test approach to co-integration. Literature survey in this subject area using Google Scholar resources reveals that there seems to be a consensus of findings in terms of the negative relationship between credit risk and Gross Domestic Product (GDP) growth rate, while other macroeconomic and bank-specific factors tend to have a random pattern relationship with credit risk attributable to various countries’ economic peculiarities. This study shows that GDP growth rate, return on asset, return on equity, interest rate, unemployment rate, and real exchange rate have a negative relationship with NPL. On the other hand, inflation rate, loan deposit ratio, and ratio of bank capital to asset have positive relationship with NPL. The relationships between the three variables and NPL were found to be individually insignificant to explain credit risk trends in the long run. Moreover, the Wald short-run causality test reveals that the macroeconomic and bank specific indicators jointly influence credit risk in the Nigeria banking sector in the short run. This study, however, recommends that since the macroeconomic and bank specific factors were found to be individually insignificant to explain credit risk trend in the long run, consideration should be accorded to some psychological, political, and socioeconomic factors such as the borrower’s attitude, business climate, social dislocations and distortions, availability of good infrastructural facilities, and the direction of government policies. These factors can affect borrowers’ ability to honor their debt obligations and, thus, determine the level of credit risk in the Nigerian economy.

Theoretical Investigation for the Failure of Lehman Brothers and Merril Lynch: A Lesson for Banking Institutions in Nigeria

The study theoretically examines the failure of Lehman Brothers and Merril Lynch as a lesson for the banking institutions in Nigeria. Hence, the instability experience in the Nigeria financial system in recent time; especially, banking sub-sector was as a result of institutional failure. Banking experts in Nigeria viewed that the failure of the two banks was an enough signal to the Nigerian banking industry. Hence, the study reveals that the two banks were absolutely limited to the size and age in determining their future instead of depending on the effectiveness and efficient management of risky assets. Hence, the conventional lending procedures are not instituted; rather than depending on subprime mortgage arrangement that has no collateral securities. The declining home prices has make refinancing more difficult as a result of inadequate innovations in securitization. The recommends that the regulatory authorities should not only relied on the conventional tools of bank supervision, but, they should employ more non-conventional methods of obtaining classified information. The financial institutions should train and retrain their employees to meet the current reality on ground. The conventional lending procedures should be instituted rather than depending on subprime mortgage management that did not have collateral securities. The Central Bank of Nigeria (CBN) should be proactive to ensure effective supervision and risk management principles.

Strategic Outsourcing and Corporate Performance in Nigerian Banking Industry

This study examined strategic outsourcing and corporate performance of commercial banks in Nigeria. The decision to outsource is driven by the perception of management on how organization can achieve corporate effectiveness and efficiency with outsourcing strategy. This study specifically focused on two objectives; to investigate the relationship between strategic outsourcing and corporate performance and to ascertain the correlation between recruitment outsourcing and corporate performance. The study used a total number of twenty two (22) commercial banks listed in the Nigerian Stock Exchange (NSE) as at 31st January 2021 in its study. Primary data were collected from the population of the study with the aid of structured questionnaire and data were analyzed through descriptive statistics and the two hypotheses formulated were tested by Pearson Product Moment Correlation (PPMC) with the use of Statistical Package for Social Science (SPSS). The results of the study revealed a significant positive relationship between strategic outsourcing and corporate performance and a significant positive relationship between recruitment outsourcing and corporate performance. The study concluded that strategic outsourcing and recruitment outsourcing have positive relationship with corporate performance. The study, therefore, recommends that corporate organizations that want to achieve significant performance in their operations should outsource some of their activities that are outside its core competence.

Human Resource Outsourcing and Skill Variety of Outsourced and Core Staff: Evidence from the Nigerian Banking Industry

In Nigerian banking industry, Human Resource outsourcing has grown beyond the externalisation of auxiliary activities to include core activities. The consequences of this practice on employee skill variety are rarely discussed in the industry. This study therefore, investigated the skill variety of outsourced and core staff in Nigerian banking industry with evidence from Bank X, Southeastern region. Survey research design was adopted. Bank X was purposively selected due to its reputation for employing outsourced staff in its core banking operations while its branches in Abia, Imo and Enugu States were randomly selected. All 352 workers in the three States comprising 218 outsourced and 134 core staff were enumerated. Mixed methods were used to collect data while descriptive statistics and Chi square at p<0.05 alpha level of significance were used to analyse data. Outsourced staff had less variety in their tasks compared to the core staff. They had less opportunities to acquire additional skills and were required to utilise fewer skills in the course of their work, leading to low skill variety. Their employment status by implication deprived them of human capital investment either privately or corporately. Mode of employment was significantly associated with skill variety.

Deployment of Point of Sales and Customer Satisfaction in the Banking Sectorin Ekiti State, Nigeria

The use of point of sale (POS) in providing banking services has become rampant in Nigerian banking sector especially in Ekiti State. This study therefore determined effects of cash withdrawal, money transfer and payment for utilities using POS terminals on customer satisfaction in the Nigerian banking sector. 320 regular customers of POS operators used for the study were selected through systematic and purposive sampling techniques. Primary data collected were analysed with the aid of Logit model. Findings from the study revealed that confidentiality, speed of transaction, friendliness of POS operator, competitive charges and convenient location were the major determinants of satisfaction when customers accessed POS to make withdrawal, money transfer and payment for utilities. The study concluded that deployment of POS significantly and positively influenced customer satisfaction in the banking sector in Nigeria and recommended more deployment of POS by banks with a view to decongesting banking halls and reduce queues at ATM terminals.

A Comparative Analysis of Marketing Strategies Adopted by Specialised and Deposit Money Banks in Oyo State Nigeria

Nigerian banking system is characterized by internal and external competition. The upsurge of new banks created room for innovation and further market sharing. A proxy to determine the extent of competition is the intensity of marketing strategies adopted by these banks in recent times. The strategies utilized by Specialized and Deposit Money Banks have been a subject of inquiry on whether they are alike or not. This work against the identified gaps, therefore, compares the marketing strategies adopted by specialized and deposit money banks and as well examines the effect of service quality management on performance of these banks. Data was collected through a self-administered questionnaire from a number of 102 bank staff in six purposely selected specialized and deposit money banks in Oyo state. SPSS was employed to aid the data analysis. Having analyzed the data, the study found out that there is an insignificant difference between the marketing strategies (promotion strategy, customer relationship management strategy and service quality) adopted by specialized and deposit money banks. Guided by the findings, the study recommended that new entrants going into banking and other financial institutions should stick to the various marketing strategies under the study with the most focus on service quality management. The work also offers that specialized banks need to have assurance, which refers to knowledge and courtesy of employees and their ability to inspire trust and confidence.