The Effect of Bank Consolidation on Bank Credit Reduction: Evidence from Selecte d Banks in Nigeria Ugwunta, David Okelue.

M.Sc Ani, Wilson Uchenna. Ph.D Ugwuanyi, Georgina. Ph.D Abstract This study x-rayed the effect of bank consolidation on credit risk reduction. Ex -post facto research design was applied to measure the credit risk reduction of consolidated banks. Loan Loss Provision Ratio to Gross Loans and Advances (LLPRG LA) was used as a measure of credit risk. The period 2000 2009 was divided into five years before the consolidation exercise and five years after the exercise. Usin g descriptive statistics given the operational variable, LLPRGLA, the performanc e of the pre-consolidation period was compared to the post-consolidation period. The descriptive statistics show that banks recorded decreases and increases at various periods of the pre and post-consolidation periods. The paired sample t-t est statistics employed to test for significant reduction in credit risks showed that one bank out of the sample had significant credit risk reduction. The stud y evidenced that the consolidation in Nigeria has not significantly reduced the credit risk of all the consolidated banks. Keywords: Consolidation; performance; credit risk; asset deterioration; Loan Los s Provision; Gross Loans and Advances.