Were the Nigerian Banking Reforms of 2005 a Success … and for the Poor?

Lisa D. Cook

Chapter in NBER book African Successes, Volume III: Modernization and Development (2016), Sebastian Edwards, Simon Johnson, and David N. Weil, editors (p. 157 - 182)
Published in September 2016 by University of Chicago Press
© 2016 by the National Bureau of Economic Research
in Research on Africa

The Nigerian banking system was in crisis for much of the 1990's and early 2000's. The reforms of 2005 were ambitious in simultaneously attempting to address safety, soundness, and accessibility. This paper uses published and new survey data through 2008 to investigate whether bank consolidation and other measures achieved their stated goals and whether they also enhanced development, efficiency, and profitability. Following the reforms, banks are better capitalized, more efficient, and less involved in the public sector but not more profitable and accessible to the poor. While there is greater supervision and less fragility, recorded distress was artificially low. The improved macroeconomic environment also explains some of the variation in observed outcomes and likely enhanced the efficacy of reforms.

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This chapter first appeared as NBER working paper w16890, Were the Nigerian Banking Reforms of 2005 A Success ... And for the Poor?, Lisa D. Cook
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