Research Article

Mitigating Effect of COVID 19 Pandemic on Banks Profitability in Nigeria: The Moderating Role of Government Financial Support

Salmanulfarisi Abdulrahaman1*
1 Department of Business Administration Yusuf Maitama Sule University, Kano Kano – Nigeria
* Corresponding author: salmanulfarisiabdu338@gmail.com
Published: Sep, 2023
DOI: 10.67894/bbr.2023.rflrgy5d
Pages: 315-335
Views: 11
Downloads: 3

Abstract

The mitigating effects (lockdown, quarantine and social distancing) of the Covid 19 Pandemic negatively affect all sources of revenues, making it difficult for banks to declare profit. The objective of the study is to explore moderating role of government financial support on the relationship between the mitigating effects of Covid 19 pandemic and banks profitability in Nigeria during the pandemic period. In achieving this, questionnaires were distributed to 86 branch and operation managers of the sampled banks in the study area were the study respondents. Using SEM / PLS, the results from the study indicated a significant and positive relationship between lockdown and banks' profitability, while quarantine and social distance do not influence banks' profitability. Furthermore, the results showed government financial support positively moderates the relationship between lockdown and banks' profitability. The study recommends that government should continue using monetary measures to strengthen banks, especially when there is a lockdown on banks in each phase of the pandemic since the pandemic is expected to continue. 

Keywords

Bank profitability Covid 19 Government Financial Support Lockdown Quarantine Social distancing

References

  1. Abdulrahaman, S.F (2010). Banking Sector Consolidation and Financial Performance: A Study of Some Selected Banks in Nigeria. M sc Unpublished (Un Published) Management Thesis, Bayero University Kano, Nigeria).
  2. Abdulrahaman, S.F (2016). The Relevant Factors of Consolidation as a Multi-dimensional Constructs in Nigerian Banking Sector. International Journal for Research in Business, Management and Accounting, 2 (4), 126-143.
  3. Abdulrahaman, S.F (2021). Bank Loan and SMEs Performance in the Era of Covid 19 Pandemic in Kano State, Nigeria. Bayero Journal of African Entrepreneurship Studies Vol. 4 (2) 85-102
  4. Adian, I. Doumbia, D; Gregory, N.; Ragoussis, A & Timmis, J.R (2020) Small and Medium Enterprises in the Pandemic Impact, Responses and the Role of Development Finance. World Bank Policy Research Working Paper 9414
  5. Ahmed, I.A (2010). Research Methods in the Social Sciences. Holsway Speed Link Investment Ltd Kano, Nigeria
  6. Ahuja, R. (2009). Research Methods. Rawat Publications Ltd, New Delhi, India
  7. Ajide, K.B ; Ibrahim, R.L & Alimi, O.Y (2020). Estimating the impacts of lockdown on Covid-19 cases in Nigeria. Transportation Research Interdisciplinary perspective. 7(1), 1-7. https://www.journals.elsevier.com/transportation-research-interdisciplinary-perspectives
  8. Akpan, F.E (2008). First bank VS Intercontinental bank: No clear winner. Financial standard, Volume 670 https://www.financialstandard.firstbanksvintercontinentalbank
  9. Amin, E.M (2006). Social Research; Conception, Methodology and Analysis. Makerere University Printery, Uganda.
  10. Amuda, Y.J (2020). Impact of Corona Virus on Small and Medium Enterprises (SMEs): Towards Post Covid 19 Economic Recovery in Nigeria. Academy of Strategic Management Journal 19 (6), 1 – 11
  11. Arestis, P; Filho, F.F. & Terra, B.H (2018). Keynesian Macroeconomic Policy: Theoretical Analysis and Empirical Evidence. PANOECONOMICUS. Vol. 65 (1)
  12. Aromolaran, A.B. & Muyanga, M. (2020). Impact of COVID-19 on Food Systems and Rural Livelihoods in Nigeria. Agricultural Policy Research in Africa Report (AFRA). Retrieved from https://opendocs.ids.ac.uk/opendocs/handle/20.500.12413/16447
  13. Baron, R. M & Kenny, D.A (1986). The Moderator-Mediator Variable Distinction in Social Psychological Research: Conceptual, Strategic, and Statistical Technaique. Journal of Personality and Social Psychology 51 (6), 1173-1182.
  14. Bloom, N.; Bunn, P.; Mizen, P.; Smietanka, P. and Thwaites, G. (2020) The Impact of Covid-19 on Productivity. NBER Working Paper No. 28233. http://www.nber.org/papers/w28233
  15. Bouey, J. (2020) Assessment of Covid 19's Impact on Small and Medium Sized Enterprises: Implications from China. http://www.rand.org
  16. Caplain, J. (2020) Bank Balance surge in SME Business Loan. http://home.kpmg/xx/en/blogs/home/posts/2020/04/banks-balance-surge-in-sme-business-loans.html
  17. Chigozie, P.B; Oju,G., obiageri, M., Egeju, ET & Ifenyi, O.Z (2020). Do Government Funding affect Productivity of SMEs. Journal of Archaeology of Egypt/Egyptology. 17 (16), 6248 – 6256.
  18. Collins, C.C; Remigius, I.U & Amarchi, I.U (2022). Impact of Covid 19 Pandemic on Corporate Performance of Banking Sector in Nigeria. International Journal of Multidisciplinary Research and Growth Evaluation. 3 (1), 462-46
  19. Dai, R.; Feng, H. J; jin Q.; Li H.; Wong, R.M; Ruixin W.; Xu, L. and Zhang, X. (2021) The Impact of Covid 19 on Small and Medium Size Enterprises: Evidence From Surveys In China. China Economic Review. 67 (101607), 1 - 10.
  20. Egwatu, P. (2020). ECONOMIC Recovery: Banks' earnings rise to N2.5tm, profit up by 5.1% to N573bn. https://www.vanguardngr.com/2021/09/economic-recovery-banks-earnings-rise-to-n2-5tm-profit-up-by-5-1-to-n573bn/
  21. Field, A. (2005, 2009 & 2015). Discovering Statistics using SPSS. 1st Ed. Sage
  22. Gain & Partners (2020) Impact of covid 19 on small and medium-sized enterprises in the food system. https://www.gainhealth.org/sites/default/file
  23. Hair Jr, J. F., Hult, G. T. M., Ringle, C., & Sarstedt, M. (2019). A primer on partial least squares structural equation modeling (PLS-SEM). Sage Publications.
  24. Henseler, J., Ringle, C. M., & Sinkovics, R. R. (2015). The Use of Partial Least Squares path modeling in international marketing. In New challenges to International Marketing. Emerald Group Publishing Limited.
  25. Hope, O.A; Saidu, M. & Success, A. A. (2020) Corona Virus Pandemic Outbreak and Firms Performance in Nigeria. Management and Human Resource Research Journal. 9 (4), 15 - 25.
  26. ITC (2020). Covid 19: The great Lockdown and its Impact on Small Businesses. International Trade Center, ITC Geneva. https://www.intercont.org
  27. IMF (2020). Policy Response to Covid 19. http://www.imf.org/en/topics/imf-and-COVID19/policy-responses-to-COVID-19
  28. JAIZ Bank (2020). Annual Statement of Account. http://jaizbankplc.com
  29. Kivuti, M. (2013). The Influence of Mergers and Acquisitions on Employee Performance. (Un Published Master Dissertation, Submitted to University of Nairobi).
  30. Konsgunst, P., Monaghan, D. & Riedwig, L. (2021). Unwinding Covid-19 Policy Interventions for Banking System. IMF Special Series on Covid 19. http://www.imf.especialseriesoncovid19-unwindingcovid19policyinterventionsforbankingsystem.
  31. KPMG (2020). Government and Institutions Measures in Response to Covid-19. https://home.kpmg/xx/en/home/insight/2020/04/
  32. Krejcie, R.V., & Morgan, D.W., (1970). Determining Sample Size for Research Activities. Educational and Psychological Measurement (1960). The NEA Research Bulletin, Vol. 38.
  33. Kunt, A.D; Pedraza, A & Ortega, C.R (2020). Banking Sector Performance during the Covid-19 Crisis. Policy Research Working Paper (9363). https://www.imf.org
  34. Mugenda, A., & Mugenda, O. (1999). Research Methods Dictionary. Nairobi: Kenya Arts Press.
  35. Nwokeoma, C.J (2021). Nigerian Banks turn up Mega Profits despite Covid 19. https://www.pmnewsnigeria.com
  36. Omoliko, E.L ; Okeke, P.C & Obiara, F.C (2021). Impact of Covid 19 pandemic on Liquidity and Profitability of Firms in Nigeria. International Journal of Academic Research in Business and Social Sciences. 11 (3), 1331 -1344.
  37. Oyeneyin, E. Y & Kuyoro, M. (2020). Nigeria's banking sector: Thriving in the face of crisis https://www.mckinsey.com/featured-insights/middle-east-and-africa/nigerias-banking-sector-thriving-in-the-face-of-crisis
  38. Oyewale, A.; Adebayo, O & Kehinde, O (2020) Estimating the Impact of COVID-19 on Small and Medium Scale Enterprise: Evidence from Nigeria. https://www.uneca.org/sites/default/files/AEC/2020/presentations/estimating-the-impact-of-covid-19-on-small-and-medium-enterprise - evidence for nigeria .pdf
  39. Ozcan, S.K (2020). Are Macro and Credit Policies Enough. IMF Special Series on Covid 19, April 9, 2020 IMF Special Series on Covid 19. http://www.imfspecialseriesoncovid19-unwindingcovid19policyinterventionsforbankingsystem.
  40. Price Water house Coopers (2020). Risk from Covid-19 and Its Impact on the Global Economy. Retrieved on 12th February 2021 from https://www.pwc.globalpolicyresponse.
  41. Rahami, Y. & Sumirat, E. (2021). A study of the Impact of ALMA to Profitability during Covid 19 Pandemic. International Journal of Business, Economics and Law Journal. 24 (3), 54 – 65.
  42. Rönkkö, M. & Cho, E. (2020). An updated Guideline for Assessing Discriminant Validity, Organizational Research Methods, pp. 1-42, doi: 10.1177/1094428120968614
  43. Sayegh, A. & Afentous, S. (2021). COVID-19 Impact on Bank Profitability in the Nordic Countries Un Published, Jankoping University).
  44. Statista (2020). Covid 19: Impact on the Net Profit of Largest Spanish Banks. https://www.statista.com
  45. Shroeder, P. (2020) US Banks Profit Fell 36.5% in 2020 on Pandemic Concern. https://www.reuters.com/article/US
  46. SUN & WEF (2020). Investigating the Impact of COVID-19 on SMEs in National Food Systems. Retrieved from https://sunbusinessnetwork.org/investigating-the-impact-of-covid-19-on-smes-in-the-food-system/
  47. Tan, B., Igan, D.; Peria, N.P & Presbitero, A.F (2020). Government Intervention and Bank Market Power: Lessons from the Global Financial Crisis for the Covid Crisis. IMF working Paper WP/20/275. https://www.imf.org
  48. Testafaye, B.L (2020). The Impact of Covid 19 on the Ethiopian private banking System. (Un Published PhD Thesis University of South Africa)
  49. UNDP (2021). Cash Transfer Project in Nigeria's Kano State Cushion the Impact of Covid-19 on SMEs. https://www.africa.undp.org/content/rba/en/home/presscenter/articles/2021/cash-transfer-project-in-nigerias-kano-state-cushions-impact-of.html
  50. Women Entrepreneurs Finance Initiatives (We-Fi, 2020). Impact of Covid-19 on SMEs. Retrieved from http://wfi.org/covid-19-response-measure-supporting-smes/
  51. WHO (2019). Corona Virus Disease (Covid-19) Pandemic. https://www.who.int
  52. WHO (2020). The True Death Toll of Covid 19: Estimating Global Excess Mortality https://www.who.int
  53. World Bank (2019, 2020). Global financial indicators. Economic Outlook. https://www.imf.org
How to Cite

Abdulrahaman, S. (2023). Mitigating Effect of COVID 19 Pandemic on Banks Profitability in Nigeria: The Moderating Role of Government Financial Support. Bayero Business Review, 7(1), 315-335. https://doi.org/10.67894/bbr.2023.rflrgy5d

S. Abdulrahaman, "Mitigating Effect of COVID 19 Pandemic on Banks Profitability in Nigeria: The Moderating Role of Government Financial Support," Bayero Business Review, vol. 7, no. 1, pp. 315-335, September 2023. doi: 10.67894/bbr.2023.rflrgy5d

Share this article:
Facebook X / Twitter LinkedIn
Download PDF View Full Text (PDF) Back to Articles