Effect Of Bank Merger And Acquisition On Small Business Lending In Nigeria (A Study Of Gtb And Uba In Nigeria)

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ABSTRACT

The study is on “the effect of bank merger and acquisition on small business lending in Nigeria”. The researcher set to explain the effect of merger and acquisition on bank lending behavior the effect is divided into four. One is the static effect and the other three are types of dynamic effect; restructuring effect, direct effect and external effect. Entangling these four effects allowed us to identify how mergers and acquisition affect small business lending. The data was collected using secondary data and multiple regression technique was adopted in analyzing the model. The following are our summarized findings; static effect, it is evident that the larger the size of a bank by M&A, the more it tends to lend to small businesses; restructuring effect, change in banking focus, resulting in poor lending to small businesses even with M&A; it also revealed a poor reaction of other lenders besides micro-financial institution in the local market to opportunities created by the restructuring and direct effect of M&A is good for the economics development of Nigeria. It is recommended that measures be put in place to enable existing banks in the country to increase in size or capital base so that the banks can make more funds available for small business lending. Key players in the banking sector should consider both the static and dynamic effects of bank merger and acquisition should the need arise to consolidate the sector again in the near future. Government through the central bank of Nigeria should examine the policy of already consolidated banks to ensure the banks do not change its focus away from providing adequate loan facility to small businesses. Cooperative societies and other non-banking institution should be sensitized to lend fund to small businesses in their localities as this measure can held grow our economic.The researcher believes that his methodology represents an extension of the existing research literature that may be usefully applied elsewhere. In particular, the inclusion of the static and dynamic effects of all of the major types of bank ownership in the model is important to avoid potentially biased and misleading results.

TABLE OF CONTENTS

Title pagei

Declarationii

Certificationiii

Dedicationiv

Acknowledgementv

Table of contentvi

List of tablesvii

Abstractxi

CHAPTER ONE

INTRODUCTION

11.Background to the study1

1.2Statement of problem5

1.3Objectives of the study8

1.4Research questions9

1.5Research hypotheses10

1.6Scope of the study10

1.7Significance of the study11

1.8Organization of the Study13

1.9 Definitions of terms14

CHAPTER TWO

LITERATURE REVIEW AND THEORETICAL FRAMEWORK

2.1The concept of merger and acquisition 18

2.2 Theoretical framework 23

2.2.1 Bank capital channel model23

2.2.2 Capital constraint model24

2.2.3 The lifecycle approach25

2.2.4 The pecking order theory25

2.2.5 Agency theory26

2.3 History of Mergers and Acquisition In Nigeria27

2.4Reasons for mergers and acquisition29

2.5The role of banking system in the economy36

2.6 Rationales for banking system reform in Nigeria38

2.7Benefit of mergers and acquisition of the Nigerian banking system40

2.8Challenges of bank mergers and acquisitions43

2.9 Financial situations of banks and small and medium

Businesses in Nigeria46

2.10Banks’ lending policies towards small and medium

Enterprises52

2.11Critical factors influencing banks’ lending to small and55

2.12 The effect of bank merger and acquisition on small57

2.12.1The four effects of merger and acquisition on bank 62

CHAPTER THREE

RESEARCH METHODOLOGY

3.1Research design69

3.2Methods of data collection and data sources70

3.3 Limitations of the study71

3.4Model Specification71

3.5Estimation technique and validation73

CHAPTER FOUR

DATA PRESENTATION, ANALYSIS AND DISCUSSION OF FINDINGS

4.1Data Presentation77

4.2 Analysis of data89

4.2.1 Analysis of regression results of the impact of bank89

4.2.2 Analysis of regression results of the impact of bank deposit on small business lending using

Pre-merged data of STB (Static effect)91

4.2.3 Analysis of regression results of the impact of bank deposit on small business lending using pre-merged

dataof UBA/STB (static effect)93

4.2.4 Analysis of regression results of the impact of bank deposit on small business lending using

Pre-merged data of GTB (static effect)93

4.2.5 Analysis of regression results of the dynamic effect of

merger and acquisition on small business lending.94

4.3Test of Hypotheses97

4.3.1HypothesisI97

4.3.2Hypothesis ii97

4.3.3Hypothesis iii98

4.3.4Hypothesisiv98

4.4Discussions of findings99

CHAPTER FIVE

SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1Summary of findings101

5.2Conclusion101

5.3 Recommendations 102

References

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Effect Of Bank Merger And Acquisition On Small Business Lending In Nigeria (A Study Of Gtb And Uba In Nigeria)

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