EFFECT OF BANKS MERGER AND ACQUISITION ON THE NIGERIA’S ECONOMIC  GROWTH: A COMPARATIVE ANALYSIS OF PRE AND POST PERFORMANCE

Bayonle Liafeez Kazeem; Abimbola Oluwaseyi Ademola; Ogunlokun A.D

Bayonle Liafeez Kazeem Department of Banking and Finance, Osun State University, Osogbo, Osun State, NIGERIA
Abimbola Oluwaseyi Ademola Department of Banking and Finance, Osun State University, Osogbo, Osun State, NIGERIA
Ogunlokun A.D Department of Banking and Finance, The Federal Polytechnic, Ado-Ekiti, Ekiti State, NIGERIA

Keywords: Gross Credit, Mergers and Acquisitions, Economic Growth, GDP, JEL Classification: D21, D4, L1, L2

Abstract

Business combination over mergers and acquisitions (M&As) have become global phenomenon to achieve economies of scale and higher productivity. This study examined effect of banks’ mergers and acquisitions on Nigeria’s economic growth prior to and after merger sessions. The study made use of secondary data obtained from Central Bank of Nigeria (CBN) Statistical Bulletin covering the period 1990–2004 for Pre-M&As and 2005–2019 for Post-M&As totaling 30 years. Descriptive statistics and ordinary least square regression were employed for data analysis. The results indicated that in the Pre-M&As era, bank’s capital base, credit granted to the private sector and bank spread positively enhanced economic growth howbeit; bank's gross credit adversely affected GDP. Findings also revealed that Post-M&As era contradicted Pre-M&As period, with all variables showing insignificant and unexpected relationship with economic growth, except credit granted to the private sector. This indicates that banks’ M&As has not positively and adequately impacted on Nigeria’s economic growth during period under consideration. As a result, te study recommends that banks’ regulatory and
supervisory framework should be strengthened and healthy competition should be promoted.