Abstract:
The banking industry by the nature of its activities is recognized as the most heavily regulated sector in both the developed and the developing economy. Due to the high risk and uncertainty overshadowing the banking industry in the pre-consolidation era traced partly to undercapitalization, some banks have been declared distress and some at the point of distress. This scenario led to decline in customers’ confidence in the sector. The government policy on consolidation as announced by the Ex-Governor of CBN on the 6th of July, 2004 was a step to nip the danger of distress in the bud and step up confidence in the banking sector. This research work is therefore designed to examine the challenges of post consolidation era and their effects on the Nigerian banking industry. The impact of consolidation on services and performance was also investigated. To gather data, personal interviews, questionnaire administration and telephone calls were used on the target population, comprising; management staff of selected banks, customers, financial analysts and other stakeholders. Percentage method was used to analyze the data collected, while chi-square technique was used to test the hypotheses formulated at 5 percent level of significance. The study observed that after consolidation: service performance improved amongst banks customers and investors confidence level have increased there is likely reduction in the rate of bank distress and There is the likelihood of government actualizing the objective of consolidation policy.The research work concluded that the mergers have made some positive impact in the banking industry in particular and the economy of the nation in general. These can be seen from the reduction of systemic risk in the industry, the synergetic effects, and the stability enjoyed in the industry. It was also suggested that banks should inculcate the best-practice of corporate governance, improve on self-regulations, institute IT-driven culture and seek to be competitive in today’s globalize world.
