BANKINGSECTOR PERFORMANCE

This study examined the impact of financial liberalization on bank performance in Nigeria for the period of 1981-2019. The main objective of this research work is to examine the impact of financial liberalization on bank performance in Nigeria. The study used Error Correction Mechanism (ECM) to examine the relationship between financial liberalization and bank performance in Nigeria. The study found that the level of financial deepening is positively and significantly related to the real interest rate. Also, money supply is positively and significantly related to the real interest rate. Also, private sector credit was found to be negatively and significantly related to the real interest rate. Finally, loan-deposit ratio is positively related to the real interest rate, it had no significant impact. The study recommends that due consideration should be given to the private sector lending which was one of the variables used to capture financial liberalization in Nigeria. Also, in order to enhance financial deepening (M2/GDP)
contribution to banks profitability in Nigeria, government policy should therefore be geared towards strategically increasing money supply and promoting efficient capital market that will enhance overall economic efficiency, create and expand liquidity, mobilize saving, enhance capital accumulation, transfer resources from traditional
sector to growth inducing sectors (such as manufacturing and industry, agriculture and services sectors) and also promote competent entrepreneurial response in various sectors of the economy. However, it is pertinent to ensure that it (money supply) does not lead to financial excessiveness.