Mergers and Profitability of Money Deposit Banks in Nigeria

This paper assessed the impact of Mergers on the profitability of deposit money banks in Nigeria. The specific objectives were to evaluate the effect of current assets, current liabilities, long-term liabilities, and fixed assets on the profitability of deposit money banks in Nigeria. The study employed expo facto design to examine the effect of Mergers on the economy. In this connection, data was collected for the pre-mergers period from 1990 - 2004 as well as Post mergers period from 2006 - 2019. The population of the study was made up of 24 banks. The study selected all the nine (9) merged banks that are still active in Nigeria’s financial sector at the time of conducting this research, they are Access Diamond bank, United bank for Africa, Union bank, Sterling bank, First bank of Nigeria, Unity bank, FCMB, Stanbic IBTC, and Keystone bank. Secondary source of data collection was used for this study. The main instrument used for data collection in this study is through statement of financial account. Descriptive statistics and ordinary least square regression model were used for data analysis with the use of E-View version 25. Trend Analysis was thereafter used to ascertain the fashion in which the banks fixed asset, current assets, long-term liabilities as well as short-term liabilities fared to further validate whether merger is a profitable consolidation tool in the Nigerian banking sector. Findings from the study revealed that there is no significant relationship between current assets and bank profitability. Secondly, the study also revealed that there is no significant relationship between current liabilities and bank profitability. Thirdly, the study also revealed that there is no significant relationship between long-term liabilities and bank profitability. The study however revealed that there is a significant relationship between fixed assets and bank profitability. The study recommended amongst others that deposit money Banks in Nigeria should monitor current liabilities using trend analysis and act accordingly as the critical role played by current liabilities of the banks can be highlighted in the spending of the banking industry.