IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 9 NO. 8 2024
DOI: 10.56201/ijefm.v9.no8.2024.pg143.156

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Impact of Globalization on the Performance of Commercial Banks in Nigeria

Adebayo, Oluwashanu Paul, Obentey Austin Amawei

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Abstract

This study investigates the impact of globalization on the performance of commercial banks in Nigeria, focusing specifically on trade openness, exchange rate and internet banking as key indicators. Employing an ex post facto research design, the study analyzes secondary data from 2009 to 2023 for 24 Nigerian commercial banks, with data drawn from the Central Bank of Nigeria (CBN) statistical bulletin. Using Ordinary Least Squares (OLS) and descriptive statistics in E- Views 10.0, the study examines how each globalization factor influences return on assets (ROA). Results indicate that trade openness has a positive but marginally significant impact on ROA, suggesting that increased trade activity may enhance bank profitability, though this effect is moderated by Nigeria's domestic economic environment. Exchange rate also show a positive yet statistically insignificant effect on ROA, implying that commercial banks may have effective risk management practices that mitigate currency volatility’s impact on profitability. Internet banking, however, reveals a negative but statistically insignificant association with ROA, suggesting limited profitability benefits, potentially due to initial infrastructure costs or adoption challenges, and recommends that policymakers should advocate for supportive trade policies, and banks improve internet banking channels to optimize profitability.

keywords:

Globalization, Trade openness, exchange rate, Internet banking and Performance

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