Oil price dynamics and the Nigerian banking industry profitability
Thesis (MDF)--Stellenbosch University, 2016.
ENGLISH SUMMARY : This research study evaluated the impact of oil price shocks on the banking sector profitability of an oil-dependent, bank-based developing economy of Nigeria. The study used an unbalanced panel dataset of 12 commercial banks that control about 76 percent of Nigerian banking industry assets, over a period of ten years spanning between 2006 and 2015 and covering two major price shock events of 2008/2009 and 2014/2015. This study tested the hypotheses of the impact of oil price shocks on Nigerian banking system profitability as well as the mechanism of transmission (direct or indirect) using a robust system-generalised method of moments dynamic panel-data model. Findings from this study empirically confirmed the impact of oil price shocks on Nigerian banking system profitability and indicated that the transmission mechanism is direct, unlike similar studies conducted in Middle East and North African countries, which indicated that the transmission mechanism is via indirect macroeconomic variables. Oil and gas sector concentration appeared to be the key driver of the direct transmission mechanism. The impact of oil price shocks on the Nigerian banking system also appeared to manifest primarily through the domestic systemically important banks. Findings also indicated the existence of a profit persistence phenomenon in the Nigerian banking system.
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