Market Concentration and Performance of Commercial Banks in Nigeria

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OLADIPUPO, Adesina Olugoke
Department of Accounting
University of Benin, Benin City, Nigeria.


ONOTANIYOHWO, Faith Ogheneovo
Department of Arts & Social Sciences
Delta State Polytechnic, Otefe-Oghara.



Analysis of the structure or pattern of market concentration and performance of commercial banks in Nigeria refers to the way in which the business of banking is been carried out by commercial banks, it involves the various activities in the nation’s banking industry which is in consonance with its profit maximization and growth activities. It is however, of a crucial importance to note that the study of market concentration and performance of commercial banks in Nigeria entails having a comprehensive insight into the banking marketing programmes, its products and services, geographical area of operation, branch networking and inter-banking service relation.

In banking market, bank customers generally have different needs and values, therefore bank marketing tend to divide the total market into segments. The banking market is an integral part of the financial system in Nigeria, this financial sector has basically two markets (Capital and money markets) which are differentiated basically by the service they render or the market they operate in the economy.

Commercial banks have long be recognized as playing an important role in the financial sector, their activities are centered in the mobilization of surplus fund from individuals and corporate bodies, and advancing same as loans to interested individuals or corporate bodies in order to maximize profits; this in turn grease the economy and facilitate its growth and development. In a bid to achieving the above objectives in a fiercely competitive arena and intense market pressure, commercial banks design attractive products and services which they use in capturing large portion of the market and enhance patronage in the industry.

Although products and services of most commercial banks have different titles, but an indebt study reveals greater similarity in actual services or activities they provide, apart from this, commercial banks strive to attract high patronage in order to achieve their set goals and objectives of profit maximization. Commercial banks tend to concentrate on certain geographical areas, they do not market their services in a vacuum, and their activities are planned and executed within the context of a geographical area with its targeted customers. This is practically evident with the influx of commercial banks whose network basically floods mostly heavy commercial towns and cities.

The largeness or viability of any commercial bank is a function of their asset base, deposit base, market share capital and number of patronage etc. Historically, formal commercial banking activities in Nigeria began in 1892 when the South African based African Banking Corporation (ABC) opened a branch in Lagos which later collapsed due to operational problems. Later, Bank of British West African (BBWA) now First Bank of Nigeria Plc and Barclays Bank Dco, now Union Bank of Nigeria opened in Lagos in 1917. Commercial banks are now on the increase as the industry is growing and significant banking event been driven largely by the nationalist consideration rather than economic factor Okigbo, (1981).

With the establishment of the Central Bank of Nigeria (CBN) in 1959, and introduction of different banking policies liberation in 1986, the open market operation in 1998 and the recapitalization/ consolidation policy in 2005, the financial system has grown tremendously; this is evident by the growth in number of branches, capacity of the operation and volume of the capital asset base of these commercial banks. Again, the efficiency and prompt realization of corporate goals and objectives of commercial banks (profit maximization) is enhanced by the...
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