Bank Capitalization and Cost of Equity on Profitability of Nigeria Deposit Money Banks – General Moment Approach

The recapitalization of the capital base of banks in 2005 constituted the first phase of the reform policy in the entire banking sector of the Nigerian economy. The key elements in the agenda included minimum capital base of N25 billion with a deadline of 31st December, 2005. Most of the banks were able to meet the deadline through mergers and acquisitions amongst other alternatives. This paper examines the trend and the effects of bank recapitalization on deposit money banks in Nigeria in terms of performance and more specifically profitability and cost of equity. The data used for this study were processed using Paired Sample test technique for difference between two periods before and after the recapitalization era in addition to the E-view electronic packages. The test of difference of mean helped us to compare the means of the variables before and after recapitalization to see if there is any significant difference between the two periods. The evidence from the study shows that recapitalization is significant to performance of deposit money banks but has not shown increasing impact on their profitability. We therefore recommend that recapitalization should be part of the integrating process to the development of the banking sector and the banks should put in place proactive measures and policies to enable it boost its profitability leve

Working Capital Management and the Performance of Consumer and Industrial Goods Sectors in Nigeria

The paper investigates the impact of working capital management on the performance of selected companies listed on the Nigerian Stock Exchange using panel data for forty (40) firms from the consumer and industrial goods sectors of the economy. Return on assets (ROA) was adopted as proxy for firm performance while cash conversion cycle (CCC), average payment period (APP), inventory collection period (ICP), and average collection period (ACP) were adopted as proxies for working capital management. Estimation of the impact of the exogenous variables (cash conversion cycle, average payment period, inventory conversion period and average conversion period) on firm performance (endogenous variable) was based on the econometric technique of the Ordinary Least Squares. The study produced evidence of significant positive impact of cash conversion cycle, average payment period, and inventory conversion period on firm performance. There is also evidence of non significant negative impact of average conversion period on the performance of the selected firms.Parameter estimates were obtained at 10 per cent level of significance. Based on the above result, the study concludes that working capital management has significant impact on the performance of firms in the consumer and industrial goods sectors of the Nigerian economy. Industry managers are therefore advised to innovate efficient strategies for managing working capital so as to optimize its potential

Constraints to Foreign Direct Investment in Nigeria

Foreign Direct Investment (FDI) is considered as an invaluable tool for achieving economic growth in developing countries. In order to achieve the objective of a higher rate of economic growth and the efficiency in the utilization of resources, developing countries the world over have embarked upon various policy measures at attracting FDI. The study is an empirical investigation (using a time series data between 1980 and 2015) into the factors that constrain the inflow of FDI into the Nigeria economy. The Phillip Perron (PP) unit root test was used to test stationarity of the variables, Johansen Co-integration approach was conducted to test for long run relationship between the variables used, Vector Error Correction Model was used to establish the short run dynamics and the long run relationship as well as ascertain the speed of systemic adjustment in the model. The study found that government external and domestic debts, inflation rate and exchange rate appreciation (in favour of the domestic currency) have significant long run relationship with foreign direct investment in Nigeria. It therefore recommends among others a more prudent management of both domestic and external debt of Nigeria and that our monetary authorities should devise effective ways of fine-tuning and managing such macroeconomic tools and variables as the rate of inflation and exchange rat

Foreign Direct Investment: Catalyst for Sustainable Economic Development in Nigeria

This is a conceptual review (content analysis) of the effect of foreign direct investment as a catalyst for sustainable economic development in Nigeria. The major objective is a comparative analysis of 87 developing countries with the capacity to attract FDI and proffer possible solutions that will catapult Nigeria as a globally acceptable haven for foreign investment. The secondary data were sourced from Investing Across Borders (IAB) 2010 report where 87 developing countries across the globe were assessed using the IAB indicators. The major conclusion drawn from the survey is that Nigeria as a country is yet to maximize its potentials (given available resources and market size) at attracting foreign investment. It also concludes that the process of foreign business establishment/ownership in Nigeria need to be improved upon to encourage high patronage of foreigners in economic activities. This study therefore recommends that Government should make policies that will encourage equity ownership of investments in Nigeria by foreigners. The authorities should put in place machineries that will ensure a transparent and simple business registration and ownership process

The Portfolio Behaviour of Employment-Based Cooperative Thrift and Credit Societies

Among the financial institutions in the informal system is the cooperative thrift and credit society which is highly prone to failure. However, some of the successful CTCS coops are employmentbased. This paper studies the determinants behind their growth and sustenance in the process of building their portfolio. The paper adopts the primary method of data gathering where 222 coop thrift officials covering 14 organisations were served with the questionnaires. 178 questionnaires were retrieved and analysed. This represented a retrieval rate of 78%. The main variables used to estimate the outputs were loans size, portfolio size and growth as dependent variables while the independent variables were, average savings, membership strength, loan access and portfolio growth other deposits from members. The techniques adopted were the ordinary least squares (OLS) and the Two stage least square (2SLS) regressions. The results indicate that membership strength is significant across the different regressions as well as supporting finance from deposits of members and other sources such as loans. The paper recommends that this type coop should be engrafted into the mainstream workplace and financial institutions and more of this type of coops should be encouraged in the system

A Review of the Causes and Effects of Disparities in Global Financial Performances of Cooperative Societies

Unlike small and medium scale enterprises, there is no doubt that cooperative societies have attracted little attention from both the public and private sectors. This is not the case in industrialized countries such as Denmark, USA, Great Britain, etc; where they have contributed immensely to the GDP of their respective economies. A review by various scholars of the various ways of financing cooperatives in Nigeria reveals that there is no adequate nation-wide financing agency. This study aims among others to review through historical data the operational and policy frameworks of the global and Nigerian cooperatives societies and other dependent cooperatives scattered all over the globe and their emerging trends in sourcing for funds. The methodology used is the content analysis. Historical (secondary data) such as journals, articles, textbooks, newspapers and Internet etc are employed. The paper identified the financing gap existing in cooperative movement in order for them to assume their proper position in the scheme of things in an emerging global economy. This paper recommends that amongst others that the Small and Medium Industries Equity Investment Scheme (An initiative of the Bankers Committee) should be extended to Nigerian Cooperative Societies

Has Post Consolidation of Deposit Money Banks Affected the Real Sector?

Deposit money banks (DMBs) are believed to be the engine for real economic growth. DMBs are expected to adequately cover the funding gap of the real sector by government resulting from market shocks, especially in developing countries like Nigeria. In this light, this paper examined the effect of post consolidation activities of Nigerian deposit money banks on real sector development. The interactive influences of the Real Sector Gross Domestic Product (RSGDP) and other post consolidation variables like Commercial Banks Deposit (CBD), Credit to Private Sector as a percentage of GDP (CPGDP), Number of Banks Branches (NBB), Commercial Banks Capital (CBC) and proxy of Political Stability (POL) were measured. Analyzing time series data ranging from 1981-2014, the econometric results obtained from co-integration test, unit root test, causality test, over parameterization model and error correction model (ECM) revealed the following: (1) the existence of a significant longrun relationship among the variables and three co-integrating relationships at 1% level of significance; (2) there is convergence of the variables from the short run to the long run though with relatively low speed of adjustment; (3) there is a significant negative relationship between RSGDP and banks’ deposit, credit to the private sector and number of branches but positive relationship with banks’ capital and political stability. The paper thus concludes that the post consolidation activities of Nigerian DMBs have not sufficiently supported sustainable real sector development in Nigeria

Firm Characteristics and Corporate Social Responsibility Practices in Nigerian Listed Firms: An Empirical Investigation

In recent past, Corporate Social Responsibility has been a fundamental subject of discussion in academic literatures because of its vital contribution to sustainable development. In line with this assertion, this study assessed the corporate social responsibility (CSR) performances of listed companies on the Nigerian Stock Exchange (NSE). A cross-sectional research design was adopted for the study and secondary data compiled from the annual reports of those companies were used for the analysis. The study employed multiple regression estimation technique to analyse the CSR ratings of sixteen (16) companies used as the basis of investigation. The study found that while market capitalization had a positive significant relationship with corporate social responsibility practice, period of existence on the listing of Nigerian Stock Exchange had a negative relationship. Also, the industrial goods sector had a positive significant relationship with CSR practice while the oil and gas sector had a significant negative relationship. It is therefore recommended that activist groups, NGOs and community leaders should be more dynamic to challenge organizations to do more for their communitie

Conceptual Review of the Effects of Advertising on Consumer Buying Behaviour

Over the years, advertising has become a regular strategy for positioning products, services and ideas in the market place. Yet an over dependence on advertising could be counter-productive and disdainful for the targeted audience who often regard excessive advertising as information overload. In spite of the growing criticisms about the effectiveness or otherwise of advertising, its relevance in contemporary marketing management is not in doubt. This exploratory study was structured to critically to examine the usefulness of advertising in persuading consumers to adopt a new or an existing product, with a special focus on Nigeria as a developing economy. The aim primarily was to examine the effect of advertising on consumer buying behaviour within the Nigerian context. The study focused on revealing the relationship either positively or negatively, between advertising and consumer buying behaviour. It equally postulates what effect continuous advertisement of product has on consumer buying behaviour. The findings indicate that advertisements that are properly packaged will surely persuade consumers to experiment the particular product, and that such advertisement should be executed long enough to generate such curiosity that will motivate consumers to buy. The study recommends a proper understanding of various segments of customers and their buying behaviours. And the organisation as well as others, must endeavour to understand the buying behaviour of its customers in order to identify the - what, why, where, when and how - they buy; otherwise, an unstructured advertising campaign will not yield positive results

EFFECT OF BANK UNDERCAPITALIZATION AND LOAN DELINQUENCY ON FINANCIAL INCLUSION IN NIGERIA

Financial Inclusion involves ensuring that the poor have access to financial services that are relevant to their needs especially in the rural communities. This study investigated the extent to which undercapitalization of rural banks and frequent loan delinquency influence the ability of deposit money banks to drive the inclusive growth agenda of the Central Bank of Nigeria. Out of the 250 questionnaires distributed, 179 were returned and analyzed. Being a categorical data, the study employed optimal scaling regression to measure the relationship between the dependent and independent variables. ANOVA and other statistical tests were also conducted. The study found that loan delinquency, undercapitalization and payment of utility bills were significant in measuring the inclusive growth initiative of the Central Bank of Nigeria. It therefore recommends among others that the central bank should make policies that will increase the credit worthiness of the rural dwellers as well as encourage banks to boost the capital base of the rural banks in order to be equipped with the financial muscle to drive financial inclusion in Nigeri