Title: Impact of Bank Competition on the Nigeria Banking System
Authors: Ayewumi Ezonfade Fredrick, Ogechukwuka Chegwe, Ehiedu, Victor Chukwunweike, LL.B
Volume: 9
Issue: 2
Pages: 61-67
Publication Date: 2025/02/28
Abstract:
Banks strive to attract customers, increase market share as well as other long-term goals. But in the strive to achieve this, uncertainties in form of (credit, operational, liquidity risk & market) risk act as impediment to their returns (Return on Equity) hence the need to explore the extent of such influence. The quantitative design which permits the exploration of tangible data was used for the study. Data in existent available at the Nigeria deposit Insurance Corporation and CBN statistical bulletin were obtained from 2000 through 2022. The multiple regression model was used to test the extent to which credit risk (CRISK), operational risk (ORISK), liquidity risk (LRISK) and market risk (MRISK) engender competitiveness of bank for their growth in Nigeria.The outcomes depict that CRISK exert substantial undesirable influence on BGROW giving the coefficient of -2.312 and Prob. 0.021. Also, ORISK exhibits constructive but non-significant influence on BGROWgiving the coefficient of 0.238 and Prob. 0.075. Similarly,LRISK reveals non-significant undesirable influence on BGROW giving the coefficient of -0.139 and Prob. 0.822. Likewise, MRISK,depict significant undesirable influence on BGROW giving the coefficient of -2.114 and Prob. 0.042. Interestingly, the level to which the variables explain BGROW is 49% with adjustment of 37%. Sequel to the results, the study concludes that credit, liquid and market risk adversely affect the competitiveness of commercial banks in Nigeria through obstruction of their financial intermediation process and an aftermath effect on their returns. Operational risks seem to have desirable influence. Base on the aforementioned, the study suggests proper credit evaluation and follow up to prevent bad credit, maintenance of sufficient funds to meet customers demand, economic stability and better internal bank processes and operation.