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The Project File Details
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 themanufacturing 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
Word Count: 232
…
Content Page
Title Page i
Certification ii
Dedication iii
Acknowledgments iv
Abstract v
Table of Contents vi
List of Tables
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 5
1.3 Objective of the Study 6
1.4 Research Question 6
1.5 Hypothesis 6
1.6 Scope of the Study 6
1.7 Significance of the Study 7
1.8 Justification for the Study 7
1.9 Operational Definition of Terms 7
CHAPTER TWO: REVIEW OF LITERATURE
2.1 Conceptual Review 9
2.1.1. Relationship Lending 9
2.1.2 Lending Relationship in Manufacturing Companies 10
2.1.3 Multiple Relationship of Manufacturing Industries in Banks 11
2.1.4 The Optimal Number of Lender Banks 12
Content Page
2.1.5 Effect of Credit Market Competition on Lending Relationships 13
2.1.6 Effect of Bank-Firm Relationship 14
2.1.7 Profitability 15
2.1.8 Financial Leverage 16
2.2 Theoretical Review 18
2.2.1 Theories of Bank Lending 18
2.2.2 The financial Intermediation theory of banking 18
2.2.3 Loan Pricing Theory 18
2.2.4 Firm Characteristics Theories 19
2.2.5 Theory of Multiple-Lending 19
2.2.6 Credit Market Theory 20
2.2.7 The Signaling Arguments 20
2.2.8 Hold-Up and Soft-Budget-Constraint Theories 20
2.2.9 Theory of optimal number of banking relationship 21
2.3 Empirical Review 21
2.4 Gaps in the Literature 30
CHAPTER THREE: METHODOLOGY
3.0 Introduction 31
3.1 Research Design 31
3.2 Population 31
3.3 Sample size and sampling Technique 32
3.4 Method of Data Collection 32
Content Page
3.5 Method of Data Analysis 32
3.6 Model Specification 32
3.7 Analytical Technique for Model Estimation 33
3.8 Ethical Consideration 33
CHAPTER FOUR: DATA ANALYSIS, RESUTS,
DISCUSSION OF FINDINGS
4.0 Introduction 35
4.1 Graphical Illustration and Descriptive Statistics 35
4.1.1 Trend of the Variables Overtime 35
4.2 Descriptive and Summary Statistics 44
4.3 Correlation Analysis 49
4.4 Empirical Analysis and Results 50
4.4.1 Testing for Research Hypothesis 50
4.4.2 Regression Analysis 50
4.4.3 Effect of Banking Relationships on Firm Performance 50
CHAPTER FIVE: SUMMARY, CONCLUSION AND
RECOMMENDATIONS
5.1 Summary 52
5.1.1 Summary of Findings 53
5.2 Conclusion 54
5.3 Recommendations 54
5.4 Contribution to Knowledge 55
5.5 Limitation of the Study 55
5.6 Suggestion for Further Studies 56
Content Page
References 57
LIST OF TABLES
Table Page
4.1: Descriptive Statistics of all sampled manufacturing firms 44
4.2: Descriptive Statistics by Manufacturing Industries 48
4.3: Correlation Analysis 49
4.4: Result of the Impact of Relationship Banking on Firm Performance 51
LIST OF FIGURES
Figure Page
4.1: Profit margin, leverage and number of banks in Julius Berger PLC 36
4.2: Profit margin, leverage and number of banks in Unilever Plc 36
4.3: Profit margin, leverage and banks in Nigerian Breweries Plc 37
4.4: Profit margin, leverage and banks in NASCON Applied Industries Plc 38
4.5: Profit margin, leverage and banks in CAP Plc 39
4.6: Profit margin, leverage and banks in May & Baker Nigeria Plc 39
4.7: Profit margin, leverage and banks in Honeywell Flour Mills Plc 40
4.8: Profit margin, leverage and banks in Dangote Sugar 41
4.9: Profit margin, leverage and banks in Guinness Nigeria Plc 41
4.10: Profit margin, leverage and banks in Ashaka Cement 42
4.11: Profit margin, leverage and banks in Berger Paints Nigeria Plc 43
4.12: Profit margin, leverage and banks in UAC Nigeria Plc 43
Content Page
Title Page i
Certification ii
Dedication iii
Acknowledgments iv
Abstract v
Table of Contents vi
List of Tables
CHAPTER ONE: INTRODUCTION
1.1 Background to the Study 1
1.2 Statement of the Problem 5
1.3 Objective of the Study 6
1.4 Research Question 6
1.5 Hypothesis 6
1.6 Scope of the Study 6
1.7 Significance of the Study 7
1.8 Justification for the Study 7
1.9 Operational Definition of Terms 7
CHAPTER TWO: REVIEW OF LITERATURE
2.1 Conceptual Review 9
2.1.1. Relationship Lending 9
2.1.2 Lending Relationship in Manufacturing Companies 10
2.1.3 Multiple Relationship of Manufacturing Industries in Banks 11
2.1.4 The Optimal Number of Lender Banks 12
Content Page
2.1.5 Effect of Credit Market Competition on Lending Relationships 13
2.1.6 Effect of Bank-Firm Relationship 14
2.1.7 Profitability 15
2.1.8 Financial Leverage 16
2.2 Theoretical Review 18
2.2.1 Theories of Bank Lending 18
2.2.2 The financial Intermediation theory of banking 18
2.2.3 Loan Pricing Theory 18
2.2.4 Firm Characteristics Theories 19
2.2.5 Theory of Multiple-Lending 19
2.2.6 Credit Market Theory 20
2.2.7 The Signaling Arguments 20
2.2.8 Hold-Up and Soft-Budget-Constraint Theories 20
2.2.9 Theory of optimal number of banking relationship 21
2.3 Empirical Review 21
2.4 Gaps in the Literature 30
CHAPTER THREE: METHODOLOGY
3.0 Introduction 31
3.1 Research Design 31
3.2 Population 31
3.3 Sample size and sampling Technique 32
3.4 Method of Data Collection 32
Content Page
3.5 Method of Data Analysis 32
3.6 Model Specification 32
3.7 Analytical Technique for Model Estimation 33
3.8 Ethical Consideration 33
CHAPTER FOUR: DATA ANALYSIS, RESUTS,
DISCUSSION OF FINDINGS
4.0 Introduction 35
4.1 Graphical Illustration and Descriptive Statistics 35
4.1.1 Trend of the Variables Overtime 35
4.2 Descriptive and Summary Statistics 44
4.3 Correlation Analysis 49
4.4 Empirical Analysis and Results 50
4.4.1 Testing for Research Hypothesis 50
4.4.2 Regression Analysis 50
4.4.3 Effect of Banking Relationships on Firm Performance 50
CHAPTER FIVE: SUMMARY, CONCLUSION AND
RECOMMENDATIONS
5.1 Summary 52
5.1.1 Summary of Findings 53
5.2 Conclusion 54
5.3 Recommendations 54
5.4 Contribution to Knowledge 55
5.5 Limitation of the Study 55
5.6 Suggestion for Further Studies 56
Content Page
References 57
LIST OF TABLES
Table Page
4.1: Descriptive Statistics of all sampled manufacturing firms 44
4.2: Descriptive Statistics by Manufacturing Industries 48
4.3: Correlation Analysis 49
4.4: Result of the Impact of Relationship Banking on Firm Performance 51
LIST OF FIGURES
Figure Page
4.1: Profit margin, leverage and number of banks in Julius Berger PLC 36
4.2: Profit margin, leverage and number of banks in Unilever Plc 36
4.3: Profit margin, leverage and banks in Nigerian Breweries Plc 37
4.4: Profit margin, leverage and banks in NASCON Applied Industries Plc 38
4.5: Profit margin, leverage and banks in CAP Plc 39
4.6: Profit margin, leverage and banks in May & Baker Nigeria Plc 39
4.7: Profit margin, leverage and banks in Honeywell Flour Mills Plc 40
4.8: Profit margin, leverage and banks in Dangote Sugar 41
4.9: Profit margin, leverage and banks in Guinness Nigeria Plc 41
4.10: Profit margin, leverage and banks in Ashaka Cement 42
4.11: Profit margin, leverage and banks in Berger Paints Nigeria Plc 43
4.12: Profit margin, leverage and banks in UAC Nigeria Plc 43
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