Bank Consolidation Programme and Lending Performance in Nigerian Banking System: An Empirical Analysis with Panel Data

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. 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. 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. The results from panel data 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. For policy, the need to strengthen the overall financial system within which the banking sector operates becomes fundamental if the potentials of the bank consolidation exercise will be fully realized.