^1,4,5Uduakobong Inyang,^3,5Aniekan Etim Bassey,^2,4Daniel Okeke Chukwudi,^1,4Francis Aniefiok Bassey

¹Department of Insurance, University of Uyo, Akwa Ibom State, Nigeria

²Department of Insurance and Risk Management, Enugu State University of Science and Technology, Enugu,Nigeria

³Akwa Ibom State House of Assembly, Uyo, Akwa Ibom State, Nigeria

⁴Risk Management and Insurance Research Cluster, University of Uyo, Nigeria

⁵Research for Impact Cluster, University of Uyo, Nigeria

This study examines the effect of consolidation of Deposit Money Banks (DMBs) on credit access risk in rural areas of Nigeria after a decade of the consolidation exercise. Secondary data on total value of credits to rural areas was obtained from the CBN bulletin for the period 1994 to 2014. This period includes 10 years of pre consolidation and 10 years of post-consolidation. Mann Whitney U test was used in analysing the data to test for significant difference in the total credit to rural areas before and after consolidation in Nigeria. The result revealed that there was a significant increase in access to DMBs’ credit by rural customers of DMBs in the post consolidation era when compared to the pre-consolidation era. The result may be is explained by the role of technology in banking. It is recommended amongst others that government should provide infrastructures like good access roads to the rural areas, electricity and support investments in Information and Communication Technology (ICT) in the rural areas as this will encourage the penetration of financial services into the hinterlands.

Credit risk, Bank consolidation, financial intermediation, Nigeria, Mann-Whitney U test

1) Acha, I. (2012). Microfinance Banking in Nigeria: Problems and Prospects.International Journal of Finance and Accounting, [online] 1(5), pp.106-111.

2) Agarwal, S. and Hauswald, R. (2007). Distance and Information asymmetry in lending. SSRN Electronic Journal.

3) Agwu, E and Carter, A. (2014). Mobile Phone Banking in Nigeria: Benefits, Problems and Prospects. International Journal of Business and Commerce, 3(6), pp. 50-70

4) Akpan, N. (2015). Women and Rural Development in Nigeria: Some Critical Issues for Policy Consideration. Social Sciences, 4(5), p.110.

5) Aku, P. (1986). Lending to farmers through the commercial banks in a developing economy: The Nigerian experience. Agricultural Systems, 22(1), pp.23-32.

6) Almazan, A. (2002). A model of competition in banking: bank capital vs. expertise. Journal of Financial Intermediation (11), pp. 87–121.

7) Ashamu, S. and Abiola, J. (2012). The Impact of Global Financial Crisis on Banking Sector in Nigeria. [online] Connection.ebscohost.com. Available at:
http://connection.ebscohost.com/c/articles/75129728/impact-global- financial-crisis-banking-sector-nigeria [Accessed 1 Jul. 2016].

8) Ayadi, O., Hyman, L. and Williams, J. (2008). The Role of Community Banks in Economic Development: A Nigerian Case Study. [online] ResearchGate. Available at: https://www.researchgate.net/publication/235678001The_Role_of_CommunityBanks_in_Economic_
Development_A_ Nigerian_Case_Study [Accessed 13 Aug. 2016].

9) Berger, A., Miller, N., Petersen, M., Rajan, R. and Stein, J. (2005). Does function follow organizational form? Evidence from the lending practices of large and small banks. Journal of Financial Economics, 76(2), pp.237-269

10) Berger, A., Demirgüç-Kunt, A., Levine, R. and Haubrich, J. (2004). Bank Concentration and Competition: An Evolution in the Making.” Journal of Money, Credit, and Banking. 36(3 Part 2), pp. 433-51.

11) Berger, A. and Udell, G. (1995). Relationship Lending and Lines of Credit in Small Firm Finance. The Journal of Business, 68(3), p.351

12) Black, E. and Strahan, P. (2002). Entrepreneurship and Bank Credit Availability. The Journal of Finance, 57 (6), pp.2807– 2833.

13) Boot, A. and Thakor, A. (2000). Can relationship banking survive competition? Journal of Finance (55), pp.679–713.

14) Burgess, R. and Pande, R. (2005). Do Rural Banks Matter? Evidence from the Indian Social Banking Experiment. American Economic Review, 95(3), pp.780-795.

15) CBNBullion (2011). The Nigeria banks and Challenges of financial services inclusion.CBN, 35(1)

16) CBNBullion (2005). Challenges of banking Sector Reforms and Consolidation in Nigeria.CBN29(2).

17) CBN Bullion (2005). Banking Sector Reforms and Bank Consolidation: A Conceptual Framework. CBN 29(3)

18) Cenbank.org. (2016). Central Bank of Nigeria | Commercial Banks. [online] Available at: http://www.cenbank.org/Supervision/Inst-DM.asp [Accessed 24 Jun. 2016].

19) Cenbank.org. (2015). Central Bank of Nigeria Communiqué’ No. 104 of the Monetary Policy Committee Meeting of Monday and Tuesday, November 23 and 24, 2015. [online] Available at: http://www.cenbank.org/Out/2015/CCD/DRAFT%20November%202015%20%20Communique_Final.pdf [Accessed 1 Jul. 2016].

20) Cenbank.org. (2016). Central Bank of Nigeria Communique No 107 of the Monetary Policy Committee Meeting of Monday and Tuesday 23rd and 24th May 2016. [online] Available at: http://www.cenbank.org/Out/2016/MPD/CBN%20MPC%20Communique%20No%20107%20of%20the%20
Meeting%20 held%20on%20May%2023%20and%2024,%202016.pdf [Accessed 1 Jul. 2016].

21) Cetorelli, N and Strahan P. (2006). Finance as a Barrier to Entry: Bank Competition andIndustry Structure in Local U.S. Markets. The Journal of Finance, 61 (1), pp. 437–461.

22) Chiappori, P., Perez-Castrillo, D. and Verdier, T. (1995), Spatial Competition in the Banking System: Localization, Cross- subsidies, and the Regulation of Deposit Rates. EuropeanEconomic Review. 39, pp.889-918.

23) Dash, M. and Das, A. (2009). A CAMELS Analysis of the Indian Banking Industry. SSRN Electronic Journal.

24) Da Silva, G. and Pirtouscheg, L. (2015). Basic interest rate, bank competition and bank spread in personal credit operations in Brazil: A theoretical and empirical analysis. EconomiA, 16(1), pp.32-45.

25) Degryse, H and Ongena, S. (2003). Distance, lending relationships, and competition, Discussion paper CES 02-16 (r) and CentER 03-123, Centre for Economic Studies, KU Leuven and Centre for Economic Research, Tilburg University

26) Deran, A., Iskenderoglu, O. and Erduru, I. (2014). Regional Differences and Financial Ratios: A Comparative Approach on Companies of ISE City Indexes. International Journal of Economics and Financial Issues. 4(4), pp.946-955.

27) Di Patti, E. and Gobbi, G. (2007). Winners or Losers?The Effects of Banking Consolidation on Corporate Borrowers. The Journal of Finance, 62(2), pp.669-695.

28) Dick, A. (2006). Nationwide Branching and Its Impact on Market Structure, Quality, and Bank Performance.Journal of Business, 79(2), pp. 567-92.

29) EFInA (2008). Access to Financial Services in Nigeria 2014 Survey. Key Findigs. [online] Available at: http://www.efina.org.ng/assets/ResearchDocuments/A2F-2014-Docs/Updated/EFInA-Access-to-Financial-Services-in- Nigeria-2014-Survey-Key-FindingswebsiteFINAL.pdf

30) EFInA (2014). Access to Financial Services in Nigeria 2014 Survey. Key Findigs. [online] Available at: http://www.efina.org.ng/assets/ResearchDocuments/A2F-2014-Docs/Updated/EFInA-Access-to-Financial-Services-in- Nigeria-2014-Survey-Key-FindingswebsiteFINAL.pdf

31) Eko, S., Utting, C. and Onun, E. (2013). Beyond Oil: Dual-Imperatives for Diversifying the Nigerian Economy. Journal of Management and Strategy, 4(3).

32) Elsas, R. (2005). Emperical Determinants of Relationship lending. Journal of Financial Intermidiation. (14), pp.32-57

33) Eze, C., Lemchi, J., Ugochukwu, A.,Eze, V., Awulonu, C., Okon, A. (2010). Agricultural Financing Policies and Rural Development in Nigeria. A paper presented at the 84th Annual Conference of the Agricultural Economics Society, Edinburg, 29-31 March. [online] Available at: http://ageconsearch.umn.edu/bitstream/91677/2/7eze_lemich_ugochukwuetal.pdf [Accessed 31 Aug. 2016]

34) Ezeoha, A. (2007). Structural effects of banking industry consolidation in Nigeria: A review. Journal of Banking Regulation, 8(2), pp.159-176.

35) Fadare, S. (2011). Banking Sector Liquidity and Financial Crisis in Nigeria. International Journal of Economics and Finance, 3(5).

36) Felix, U., Rebecca, L., Felix, U. and Rebecca, L. (2015). Effect of Global Financial Meltdown on the Nigerian Banking Industry and Economy. Management, [online] 5(3), pp.63-89.

37) Freixas, X. and Rochet, J. (1997), Microeconomics of Banking, MIT Press.

38) Fund, I. (2013). Nigeria; Financial Sector Stability Assessment. [online] Econpapers.repec.org. Available at: http://econpapers.repec.org/paper/imfimfscr/13_2f140.htm [Accessed 1 Jul. 2016].

39) Fund, I. and Bank, W. (2013). Financial Sector Assessment Program: Nigeria - Basel Core Principles for Effective Banking Supervision. World Bank, Washington, DC. [online] Available at: https://openknowledge.worldbank.org/handle/10986/15968 [Accessed 1 Jul. 2016].

40) Geršl, A. and Jakubík, P. (2011). Relationship Lending in Emerging Markets: Evidence from the Czech Republic. Comp Econ Stud, 53(4), pp.575-596.

41) Gilje, E., Loutskina, E. and Strahan, P. (2016). Exporting Liquidity: Branch Banking and Financial Integration. The Journal of Finance, 71(3), pp.1159-1184.

42) Guiso, L., Sapienza, P., Zingales, L. (2004). Does informed financial development matter? Quarterly Journal of Economics (119), pp. 929–969.

43) Hauswald, R., Marquez, R. (2003). Information technology and financial services competition. Review of Financial Studies (16), pp. 921–948.

44) Hauswald, R., Marquez, R. (2006). Competition and strategic information acquisition in credit markets. Review of Financial Studies. (19), pp.967–1000.

45) Hellmann, T., Murdock, K. and Stiglitz, J. (2000). Liberalization, Moral Hazard in banking and Prudential Regulation: Are Capital Requirements Enough? The American Economic Review. 90(1), pp. 147-165

46) Imeokparia, L. (2015). Capital Base and Performance of Money Deposit Banks in Nigeria: Pre and Post Consolidation Era. [online] Available at: https://www.arcjournals.org/pdfs/ijmsr/v3-i1/11.pdf [Accessed 30 Jun. 2016].

47) Inyang, U., Bassey, A. E., & Umunnakwe, A. I. (2022). Evidence-Based Policy Evaluation: Focus on Micro-Insurance Operational Policy in Nigeria. International Journal of Finance, Insurance and Risk Management, 12(3), 108-124.

48) Inyang, U. & Acha, I (2019). Urban Vs Rural Residents’ Savings in Formal Financial Institutions in the Niger Delta Region, Southern Nigeria: An Exploratory Study. Journal of Finance and Business Policy, 4(1), 8-15.

49) Inyang, U., Flannery, D., & Garvey, J. (2019). Savings Behaviour in the Niger Delta Region: An Exploratory Analysis. The Empirical Economic Letters, 18(12), 1250-1254.

50) Iganiga, B. (2010). Evaluation of the Nigerian Financial Sector Reforms Using Behavioral Models. Journal of Economics. 1 (2), pp. 65-75

51) Inderst, R. and Mueller, H. (2007). A lender-based theory of collateral. Journal of Financial Economics. 84(3), pp.826-859.

52) Jain, S. (1999). Symbiosis vs. crowding-out: the interaction of formal and informal credit markets in developing countries. Journal of Development Economics, 59(2), pp.419-444.

53) Kanapickienė, R. and Grundienė, Ž. (2015). The Model of Fraud Detection in Financial Statements by Means of Financial Ratios. Procedia - Social and Behavioral Sciences, 213, pp.321-327.

54) Kenn-Ndubuisi, J and Akani, H (2015). Effects of Recapitalisation on Commercial Banks Survival in Nigeria: Pre and Post CAMEL Anaylsis.European Journal of Accounting, Auditing and Finance Research, 3(9), pp.12-30

55) Kerr, W. and Ramana N. (2009). Democratizing Entry: Banking Deregulations, Financing Constraints, and Entrepreneurship. Journal of Financial Economics, 94 (1), pp.124–149.

56) Koch, T. and Mac Donald, S. (2003). Bank Management. [online] Google Books. Available at: https://books.google.ie/books/about/BankManagement.html?id=YzG32Wa3e3gC&redir_esc=y [Accessed 14 Mar. 2016].

57) Kolapo, F., Ayeni, K. and Oke, O. (2012). Credit Risk and Commercial Banks’ Performance in Nigeria: A Panel Model Approach. [online] www.ajbmr.com. Available at: http://ajbmr.com/articlepdf/aus_20_70i2n2a4.pdf [Accessed 1 Jul. 2016].

58) Lederer, P. and Hurter, A. (1986), Competition of Firms: Discriminatory Pricing andLocation, Econometrica 54: 623.640.

59) Lee, C. and Hsieh, M. (2013). The impact of bank capital on profitability and risk in Asian banking. Journal of International Money and Finance, 32, pp.251-281.

60) McKinnon, R. and Shaw, E. (1973). Financial Repression. [online] web.pdx.edu. Available at: http://web.pdx.edu/~ito/Financial_repression_RE_-HI.pdf [Accessed 15 Mar. 2016].

61) Microsystems Report. (2016). The Effects of Bank Consolidation on the Performance Of Banks In Nigeria: A Case Study Of Fidelity Bank, UBA, Access Bank And Union Bank – Enems Microsystems. [online] Enemsmicrosystresearchspot.com. Available at: http://www.enemsmicrosystresearchspot.com/uncategorized/the-effects-of-bank-consolidation-on-the- performance-of-banks-in-nigeria-a-case-study-of-fidelity-bank-uba-access-bank-and-union-bank/ [Accessed 14 Mar. 2016].

62) Nachar, N. (2008). The Mann-Whitney U: A Test for Assessing Whether Two Independent Samples Come from the Same Distribution. Tutorials in Quantitative Methods for Psychology, 4(1), pp. 13-20.

63) Nguyen, H. (2014). Do Bank Branches Still Matter? The Effect of Closings on Local Economic Outcomes. Department of economics working paper, Massachussett institute of technology. Available at: http://economics.mit.edu/files/10143 [Accessed 18 Jul. 2016].

64) Milenovic, Z. (2011). Application of Mann-Whitney U Test in Research of Professional Training of Primary School Teachers. Metodickiobzori, 6(1).

65) Mora, Nada (2013). Lender Exposure and Effort in the Syndicated Loan Market. The Federal Reserve Bank working paper. The Federal reserve bank, Kansas City. Available at: https://www.kansascityfed.org/publicat/reswkpap/pdf/rwp10-12.pdf

66) Norden, L. and Weber, M. (2010). Credit Line Usage, Checking Account Activity, and Default Risk of Bank Borrowers. Rev. Financ. Stud., 23(10), pp.3665-3699

67) Okafor, C., Ikechukwu, K. and Adebimpe, U. (2010). The Effect of Capital Adequacy on Banks’ Performance: Evidence from Nigeria. Journal of Business Research, 4(1-2)

68) Oluwatolani, O., Joshua, A. and Philip, A. (2011). The Impact of Information Technology in Nigeria's Banking Industry. [online] ResearchGate. Available at:
https://www.researchgate.net/publication/51929036_The_Impact_of_Information_Technology_in_Nigeria's_
Banking_ Industry [Accessed 1 Jul. 2016].

69) Owenvbiugie, R. and Igbinedion, V. (2015). Role of Finance on the Growth of Small and Medium Scale Enterprises in Edo State of Nigeria. Journal of Educational and Social Research, 1(5)

70) Park, J. (2012). Corruption, soundness of the banking sector, and economic growth: A cross-country study. Journal of International Money and Finance, 31(5), pp.907-929.

71) Petersen, M. and Rajan, R. (1994). The Benefits of Lending Relationships: Evidence from Small Business Data. The Journal of Finance, 49(1), pp.3-37.

72) Petersen, M. and Rajan, R. (2002). Does Distance Still Matter? The Information Revolutionin Small Business Lending.Journal of Finance (57), pp.2533-2570.

73) Roll, R. (1986). The Hubris Hypothesis of Corporate Takeovers. Journal of Business 59(2), pp.197-216

74) Rose, P. (2003). Money and Capital Markets - Financial Institutions and Instruments in a Global Market place. USA: MCGraw-hill/ Irwin.

75) Salawu, R. and Salawu, M (2007). The Emergence of Internet Banking in Nigeria: An Appraisal. Information Technology Journal, (6), pp. 490-496.

76) Schargrodsky, E. and Sturzenegger, F. (2000). Banking regulation and competition with product differentiation. Journal of Development Economics, 63(1), pp.85-111.

77) Somoye, R., 2008. The performances of commercial banks in post-consolidation period in Nigeria: An empirical review. European Journal of Economics, Finance and Administrative Sciences, 14(1), pp.62-73.

78) Sussman, O. and Zeira, J. (1995), Banking and Development. CEPR Discussion Paper 1127.

79) Ugwuanyi, U. (2015). Relevance of Mergers and Acquisition on Financial Performance of Deposit Money Banks: Evidence from Nigerian Banking Industry. Journal of Economics and Finance, 6(4), pp. 68-76

80) Ukoha, C. (2013), Barriers to SMEs’ Access to Bank Loan in Nigeria. Scottish Journal of Arts, Social Sciences and Scientific Studies, 11(2), pp.69 – 80

81) Uzonwanne, M. (2015). Economic Diversification in Nigeria in the Face of Dwindling Oil Revenue. Journal of Economics and Sustainable Development, 6(4), pp.61-67.

82) Wheelock, D. (2011). Banking Industry Consolidation and Market Structure: Impact of the Financial Crisis and Recession. Federal Reserve Bank of St. Louis Review, 93(6), pp. 419-38.

83) World Bank. (2016). Nigeria Economic Report: Improved Economic Outlook in 2014, and Prospects for Continued Growth Look Good. [online] Available at:
http://www.worldbank.org/en/country/nigeria/publication/nigeria-economic-report- improved
-economic-outlook-in-2014-and-prospects-for-continued-growth-look-good [Accessed 1 Jul.

VOLUME 06 ISSUE 06 JUNE 2023

There is an Open Access article, distributed under the term of the Creative Commons Attribution – Non Commercial 4.0 International (CC BY-NC 4.0) (https://creativecommons.org/licenses/by-nc/4.0/), which permits remixing, adapting and building upon the work for non-commercial use, provided the original work is properly cited.