GLOBALISATION AND EFFICIENCY OF DEPOSIT MONEY BANKS (DMBs) IN NIGERIA

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Department of Administration

ABSTRACT

Globalisation stimulates competition in the banking sector which makes the concept of efficiency more important to banks in order to remain viable. The main objective of this study is to determine the impact of globalisation on the efficiency of Deposit Money Banks (DMBs) in Nigeria. Secondary source of data was used by the study, panel data was retrieved from the NSE factbook and CBN annual reports and statement of accounts on a sample of eight DMBs from 2002 to 2013. The Data Envelopment Analysis (DEA) technique was used to estimate efficiency scores of the banks using the DEA Programme, Malmquist productivity index was also computed across selected banks and Hadri Langrange Multiplier Unit root test was conducted on the panel data to determine their stationarity, in addition Random Effects Generalised Least Square regression analysis was used to test the hypotheses. 

The results of the DEA revealed that Zenith bank had the highest Technical Efficiency change of 1.85 in the period of the study. From the Hadri Langrange Multiplier Unit root test that was conducted pure technical efficiency change, scale efficiency change and liberalisation were found stationary at levels and technical efficiency change and total factor productivity change were found stationary at the first difference. The test of hypotheses revealed a significant positive effect of globalisation on technical efficiency change and total factor productivity change with p-values of 0.09 and 0.09 respectively at 10% level of significance. Pure technical change and scale efficiency changes were not significant as the p-values are 0.43 and 0.09 respectively. 

The study therefore concludes that globalisation has a significant positive impact on efficiency of DMBs in Nigeria within the period of the study. The study recommends that DMBs should also ensure that they continue to take advantage of the potentials they can gain from globalisation through continous improvements in their technical efficiency and productivity.


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