Does Banking Sector Reform Buy Efficiency Of Banking Sector Operations? - Evidence from Recent Nigerias Banking Sector Reforms

Abstract

There is a growing concern associated with the recent banking sector reform on whether it achieved its purpose of making banks efficient or not. Several studies have had several opinions with respect to the real impacts of banking sector reforms on banking sector efficiency. Consequently, this study examines the impact of Nigerian banking sector reforms on Nigerian banks’ performance and efficiency in two time periods – pre -consolidation period and post-consolidation period. To evaluate this, the researchers adopt a non-parametric (Data Envelopment Analysis) approach, and the factors that determine efficiency are examined. The findings of this study reveal varying levels of efficiency in both periods. Although some banks still remained inefficient, there was a general improvement in efficiency in the post-consolidation period. This improvement was not entirely attributed to the consolidation policy as two immediate years after the consolidation exercise still recorded poor levels of efficiency among many banks. Further investigation reveals some effects of the recent financial crisis on the overall efficiency of Nigerian banking sector.