Banking Business Models and Deposit Funding Requirements: A Study of Selected Nigerian Deposit Money Banks

The objective of this paper was to examine the empirical evidence of the different business models that Nigerian deposit money banks operate and their deposit funding requirements using the top five Nigerian deposit money banks by asset base. Data were collected from various annual reports of Access Bank, Zenith Bank, FBN Holdings, UBA, and GT Bank from 2005 to 2020. We reviewed the bank’s primary deposit characteristics to establish the prevailing deposit mix, with an inquiry into why banks switch models. We used the cluster analysis technique to analyse the selected banks statements of financial position ratios and identify the different business models the banks had adopted in the period under study. The studied banks, Access, Zenith, FBN Holdings, UBA, and GT Bank, were classified according to the respective business models they adopted using the data characteristics. The identified models are retail-funded, wholesale-funded, and market-oriented. The findings from the cluster analysis show that Zenith, UBA, and FBN Holdings adopted wholesale, retail, and market-oriented models, respectively. Access and GT Banks switched models at various times. Across the models, the activities of the banks on the asset side of the balance sheet were mainly funded by customer deposit liabilities. The banks’ deposit structures also indicate that the mixes were skewed in favour of current accounts and savings bank accounts, which are known, in banking parlance, as demand deposits. We conclude that demand deposits are critical and the most vital components of banking institutions deposit structures, irrespective of the business model adopted. Its implications for the profitability, efficiency, and effectiveness of the bank's overall objectives cannot be overemphasized. We also conclude that the reason for switching models in Nigerian deposit money banks flows more from the strategic decisions of the management than regulatory or environmental factors

Analysis of Financial Markets and Performance of Nigerian Economy

One of the issues confronting the Nigeria State has been achieving sustained growth and prosperity in the midst of abundance. The financial market has been conceived as a pillar of growth and operations in the market can drive the domestic economy. This propelled the inquiry into the impact of financial market operations on the performance of the Nigerian economy. In analyzing the nexus between financial market operations and performance of the Nigerian economy, the study employed secondary data sourced from the Central Bank of Nigeria Statistical Bulletin and the World Development Indicator. The study observed the past evolution of the series from 1990 to 2021. Real gross domestic product was chosen to reflect the performance of the Nigerian economy. The study proxy financial market operations using ratios outstanding government securities, outstanding equity, and outstanding bond, while controlling for credit to private sector as percentage of GDP. The econometrics technique of cointegration and autoregressive distributed lag (ARDL) estimation tool was employed in analyzing the short run and long run behaviour of the series. Evidence from the bound test attest to long run relationship between the variables of interest. From the long run result, the study found evidence of significant positive impact of outstanding government securities on performance of the Nigerian economy. In addition, a significant positive relationship was found between outstanding equity and performance of the Nigerian economy. Credit to private sector was found to exert a direct and significant impact on real GDP. An increase in outstanding bond insignificantly improved the performance of the Nigerian economy. Instigated by these findings, the study advanced that formal legal and regulatory barriers instituted by regulatory bodies that pose as impediment to growth of the financial market should be remove in order to attract investors and increased credit allocation to real sectors of the economy to boost economic activities

Analysis of the Effect of Foreign Exchange Market Returns of Emerging African Economies on Nigerian Stock Market Volatility

This research analysed the effect of foreign exchange market returns of emerging African economies on Nigerian stock market volatility. It deployed weekly exchange rate data of the sampled foreign exchange markets and Nigeria Stock market All Share Index for the period. The Econometric tools used were the symmetric Generalised Auto Regressive Conditional Heteroskedacity (GARCH), Asymmetric Threshold GARCH and Power GARCH models. Results show that: Nigerian Stock market volatility was not evidently driven by the influence of the foreign exchange markets of the emerging economies. .The Nigeria stock market volatility is persistent with no asymmetric or leverage effect. Symetric GARCH was proven to have outperformed the other ARCH-type models. There is negative correlation between Nigeria Stock Market returns and Nigeria foreign exchange market and other African countries. The interactions among African Foreign exchange markets are poor. It is recommended that risk monitoring and assessment in the Nigeria stock market should be done with appropriate techniques for objectivity, exclusion of bias and optimal investment outcomes. This study has proven the plausibility of GARCH –type models if the volatility in the market must be described and captured

Corporate Governance and Bank Performance: A Study of Deposit Money Banks in Rivers State

This study investigates the relationship between corporate governance and firm value: a study of deposit money banks in Rivers State. Six null hypotheses were formulated from the study variables. The survey method was adopted to study sixty-eight (68) managers of deposit money banks in Rivers State. The null hypotheses were tested through the Spearman Rank Correlation coefficient statistical tool and the findings showed a significant positive relationship between the corporate governance and firm value. Thus, it was concluded that corporate governance influences the value of deposit money banks in Rivers State. Specifically, fairness and transparency of board members and the banks, significantly improves shareholders and investors’ perception of value of a firm. In line with the findings, it is recommended that the management of deposit money banks should: ensure there is cordial interrelationship between the boards of the banks, the management and the shareholders through continuous consultations and carrying everyone along; and the government and regulators such as the CBN should have zero tolerance for below standard corporate governance practices by Nigeria banks. The central bank should be above board and transparent in dealings with the banks to ensure that all stakeholders’ interests in the Nigeria banking sector are consistently protected

Electronic Payment Systems and Performance of the Nigerian Banking Industry

This study examined the effect of electronic payment systems on the performance of the Nigerian banking industry. The electronic payment systems considered were automated teller machine, point of sale, mobile payment technology and internet or web assisted payment medium on the bank performance indicator of return on assets. The study used quarterly frequency data from 2010Q1 to 2019Q4 and the static and dynamic models was estimated using the autoregressive distributed lag (ARDL) method. Stability of the series was tested using the augmented Dickey-Fuller and the bound test method was employed in testing for cointegrating relationship among the interest variables. From the bounds test, the study discovered common trend movement among the variables of interest. The long run result indicated that the usage of mobile phone technology and point-of-sale increase bank performance, but only insignificant. In addition, increased use of automated teller machine and web payment medium insignificantly cause decline in performance of banks in Nigeria. These results indicated that the performance of Nigerian banking industry is unaffected by the use of electronic payment systems. Following these results, it was recommended that banks invest in improving the speed, carrying capacity and accuracy of the payment systems

Financial Institution Readiness and Adoption of Machine Learning Algorithm and Performance of Select Banks in Rivers State, Nigeria

The study investigated how banks’ readiness and adoption of machine learning algorithms affect performance of banks in Rivers State. The study assessed the preparedness of financial institutions in incorporating MLA to enhance their performance. The concentration is on the banking sector and the aim is to uncover the level of readiness and the elements that may guide the adoption of ML in the financial business. This study focused on how organizational leadership clarity, employees' willingness to change, and access to technology affects efficiency, effectiveness, and productivity of banks in Rivers State. Data for the study were collected using structured questionnaires distributed to 133 respondents, with only 120 valid questionnaires. The Spearman rank correlation coefficient (SRPCC) method was employed in the study at the 5% threshold. The SRPCC test revealed that organizational leadership clarity, employees' attitude to change, and access to technology all had a significant impact on measures of improved service delivery (efficiency, effectiveness, and productivity) in banks in Rivers State. Finally, banks' readiness and adoption of machine learning algorithms have beneficial and consequential relationship with service delivery performance. According to the study, banks should implement strong organizational leadership clarity to ensure their readiness and willingness to use machine learning algorithms to improve service delivery outcomes. Employees' attitudes towards the acceptance and use of machine learning algorithms should be encouraged and improved through knowledge transfers, as it serves as a springboard for improved service delivery performance amongst banks