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Empirical assessment of the competitive conduct of Nigerian banks in a post-consolidation era

Osuagwu, Eze (2016): Empirical assessment of the competitive conduct of Nigerian banks in a post-consolidation era. Published in: Research in international business and finance No. 41 (March 2017): pp. 412-422.

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Abstract

This paper investigates the level of competition in the Nigerian banking industry employing a non-structural approach deduced from Panzar and Rosse (1987) model, on a bank level data 2005 – 2014. The crux of this paper is to ascertain the prevailing market structure in the Nigerian banking industry following the recapitalization policy that took effect in 2005. Empirical evidence from the Panzar and Rosse H-statistic reveals that the market structure of the Nigerian banking industry is monopolistic competition, which implies that banking products and services are homogenous but differentiated, and firms are independent in their decision-making and conduct. Findings also suggest that bank competitiveness decreases as revenue profile tends toward an inclusion of non-interest income or fee based services.

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