Abstract

This paper investigates the effect of bank consolidation in Nigeria on the structural characteristics of the banking market using the three-bank, five-bank and eight-bank concentration ratios as well as the Herfindahl-Hirschman Index (HHI) seven years after the conclusion of the first phase of the program. The result establishes a substantial increase in concentration for the post consolidation period with very high tendency to gravitate towards becoming a moderately concentrated market according to the USA merger guideline. Also, there is the emergence in 2012, of eight top dominant banks controlling more than 75% of the Nigerian banking business especially in the total assets market. The implication of this finding is that there is the need to forestall collusive and anti-competitive practices by stepping up the oversight functions of the regulatory and supervisory agencies while reviewing periodically the hurdles for new entrants to the industry.

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