Many banks are family-owned and exist only because of their close connections to Nigeria's political elite.Oil-rich Nigeria is Africa's most populous country, with 130m people. Mr Soludo wants to see more banks offering the right services to ordinary depositors, which in turn will help stabilise the lending environment in one of the continent's biggest economies.But the observers who initially dismissed Soludos reform plans as fanciful now concede that Nigerias banking sector appears to have turned a corner in its rehabilitation.
The study utilized cross-sectional data sourced from the 89 pre-consolidation banks and the 25 post consolidation banks in Nigeria and the Engle-Granger approach to error-correction estimating techniques on the empirical model of bank credit performance. As Alashi (1991) indicates, evidence (both theoretical and empirical) abound that suggests a positive correlation between real economic growth and banks assets-especially credits.
The results from analysis generally confirmed that consolidation-induced changes in banks structure in terms of size and capitalization positively influence bank lending performance in the Nigerian banking industry. Substantial body of empirical literature agreed that for sustainable growth, the banking sector has to be effective and efficient to respond favorably to the needs of the productive sectors of the economy.
Yet just 20 months later, his action and the chain of recapitalisations and mergers it heralded has transformed Nigerias banking sector for the better and strengthened the countrys overall economic stability. While capital adequacy may have improved, efficiencies have yet to be realised from the many mergers that have occurred and corporate governance remains woefully poor at many banks.
Corruption, fraud and public mistrust of the banking system remain deeply engrained.
The study aims to assess the response of flows of credit from the banking sector to reforms and consolidation programme in the Nigeria banking sector. The International Journal of Applied Economics and Finance, 6: 100-108. doi=ijaef.2012.100.108 INTRODUCTION The role of the banking industry is crucial in the pattern and pace of economic growth and development, as it is well articulated and established in the literature (Demirguc-Kunt and Huizinga, 1997).
This is intended to serves as a linchpin to appraise the relevance and effectiveness of the spate of reforms and consolidation of the nations banking sub-sector. Banks occupy a position in the financial system that supplies the credits need of the economy.
He graduated with a First Class Honors degree in 1984, an MSc Economics in 1987, and a Ph D in 1989, winning prizes for the best student at all three levels.
He has been trained and involved in research, teaching and auditing in such disciplines as the multi-country macro econometric modelling, techniques of computable general equilibrium modelling, survey methodology and panel data econometrics, among others.
Mr Soludo's directive was intended to spur on a consolidation of Nigeria's fragile and overcrowded banking sector, mainly through mergers.
The aim is eventually to reduce the number of banks from 89 to about 12.
Charles Chukwuma Soludo, CFR (born 28 July 1960) is a Nigerian economics professor and a former Governor and chairman of the board of directors of the Central Bank of Nigeria (CBN). Prof Soludo has been visiting scholar at the International Monetary Fund, the University of Cambridge, the Brookings Institution, the University of Warwick and the University of Oxford and a visiting professor at Swarthmore College (USA).