Performance of Liabilities Accruing from Liberalization of the Banking Sector in Nigeria

This paper investigates the behavior of the banking sector with a view to ascertaining whether or not the deposit liabilities accruing from financial liberalization were efficiently applied by the sector to enhance performance. It is based on the experience of Nigeria which is a developing country that suffered severe and prolonged economic recession leading to the adoption of financial liberalization policy in 1986. The investigation yields interesting results which reveal that the effect of expansion in deposit liabilities on performance of the banking sector was indeed positive and highly significant. It follows therefore that the banking sector efficiently utilized the expanded deposits to enhance profit and hence the policy of financial liberalization largely benefited shareholders in the banking sector.