This study analysed the effect of 2004 banking sector consolidation policy on banking industry
profitability in Nigeria. The study covered the period 1993 -2015, which was divided into the preconsolidation
period (1996-2004) and post-consolidation periods (2006-2014), with 2005 as breaking
point. Three commercial banks (Access bank, GTbank, and First bank) formed the sample size.
Profitability was proxy by PAT (profit after tax); the CAMEL (capital adequacy, asset quality,
management effectiveness, earning quality and liquidity management) index were used as drivers of
profitability. Combinations of descriptive and econometric tools were employed in analysis of collected
data. Econometric tools included Augmented Dicker Fuller (ADF), Autoregressive model (VAR),
Granger causality test, ordinary least square regression (OLS) and Chow structural stability test. The
study found that the 2004 consolidation policy led to significant improvement in the management
effectiveness of consolidated commercial banks; it was equally found that the policy did cause structural
break in the profitability trend of the Nigerian banking industry. The study recommended increased
efforts aimed at minimizing the incidence of increasing non-performing loan portfolio by individual
banks in order to maintain high assets quality levels and optimum liquidity for enhanced profitability.
Keywords: Banks, performance, consolidation, profitability, merged and stand-alone banks
SYLVIA, E (2021). The Impact Of Consolidation Policy On Banking Sector Profitability In Nigeria. Afribary. Retrieved from https://afribary.com/works/the-impact-of-consolidation-policy-on-banking-sector-profitability-in-nigeria-1
SYLVIA, EKEOCHA "The Impact Of Consolidation Policy On Banking Sector Profitability In Nigeria" Afribary. Afribary, 11 Apr. 2021, https://afribary.com/works/the-impact-of-consolidation-policy-on-banking-sector-profitability-in-nigeria-1. Accessed 31 Mar. 2023.
SYLVIA, EKEOCHA . "The Impact Of Consolidation Policy On Banking Sector Profitability In Nigeria". Afribary, Afribary, 11 Apr. 2021. Web. 31 Mar. 2023. < https://afribary.com/works/the-impact-of-consolidation-policy-on-banking-sector-profitability-in-nigeria-1 >.
SYLVIA, EKEOCHA . "The Impact Of Consolidation Policy On Banking Sector Profitability In Nigeria" Afribary (2021). Accessed March 31, 2023. https://afribary.com/works/the-impact-of-consolidation-policy-on-banking-sector-profitability-in-nigeria-1