RELATIONSHIP BANKING AND PERFORMANCE OF MANUFACTURING SECTOR FIRMS: EVIDENCE FROM NIGERIA

RELATIONSHIP BANKING AND PERFORMANCE OF MANUFACTURING SECTOR FIRMS: EVIDENCE FROM NIGERIA

 

ABSTRACT

This study focused on examining the effect of Relationship banking on the performance of manufacturing sectors in Nigeria within the period of 2010 to 2014. This study was carried out to investigate the implication of banking relationship on firm’s performance in the manufacturing sector in Nigeria, using the number of banks as proxy for Relationship banking and leverage as proxy for effects of increase in banking relationships.

Secondary data were collected from the publicly available audited financial statements of the companies selected. Ordinary least Squares Regression was implemented using panel data in testing the correlation between Relationship banking and performance of twelve manufacturing companies respectively while descriptive analysis was done with the use of graph in analyzing alterations in the variables over time.

The result from the ordinary least squares (OLS) regression analysis showed that Relationship banking does not have any significant relationship on the performance of the twelve Nigerian manufacturing companies used in this study.

The study concluded that the number of banking relationships the manufacturing companies have does not determine or have any form of effect on the performance of these firms. This is possible, in that whether there is a decrease or increase in these banking relationships to the manufacturing sector, it neither discourages, nor encourages these manufacturing sectors to expand their businesses and scope of operation, which has ultimately contributed to the massive decline in Nigerian manufacturing sectors.

Keywords:     Profit Margin, Number of banks, Leverage, Manufacturing companies, Banking Relationship