THE IMPACT OF FOREIGN DIRECT INVESTMENT ON THE NIGERIAN BANKING SECTOR.
This work studies the level of impact; foreign direct investment has on the Nigerian banking sector in the wake of the unprecedented amount of capital flight that occurred from the Nigerian economy during the recent global economic recession (the credit crunch). Data which are secondary were obtained from the Central Bank of Nigeria (CBN). The expost-facto research design was adopted to determine the level of the impact for 25 deposit money banks for the period 2006-2010. The ordinary least square (OLS) estimation technique was employed using statistical packaging for social sciences (SPSS) computer software version 16.0 for statistical analysis. Results revealed that there is a non-positive significant impact of foreign direct investment on the equity capital of the Nigerian banking sector, there is a negative insignificant impact of foreign direct investment on the liquidity position of the Nigerian banking sector and there is a negative insignificant impact of foreign direct investment on the total assets of the Nigerian banking sector. It is recommended therefore that the Nigerian Government should take more seriously the responsibility of creating an enabling environment for effective, value- adding foreign direct investment in the banking sector without losing the prerogative of sovereignty. It is also recommended that already existing foreign direct investment in Nigeria should be sustained and that Government should begin now to look at foreign direct investment from a deeper perspective. The quality and structure of foreign direct investment should now be viewed from the perspective of investment in the real economy (i.e power, manufacturing, banking, and export-oriented industries) and the use of local suppliers, rather than a lopsided focus on extractive industries. Lastly, it is recommended that stakeholders in the banking industry should take the issue of human capital development more seriously.
BACKGROUND TO THE STUDY