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Nexus of bank personnel and cost-income ratio (CIR) in Nigeria

Journal: Banks and bank systems [electronic resource] (Vol.12, No. 4)

Publication Date:

Authors : ; ; ; ;

Page : 154-162

Keywords : cost-income ratio (CIR); Granger causality; Nigeria banking sector; personnel ratio;

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This study investigates the causal relationship between bank personnel ratio and the cost-income ratio based on performance in Nigeria for the period of 2004–2015. Secondary data collected on a cross section of 15 banks during this period was analyzed using panel unit root, cointegration and Granger causality techniques. A unit root test revealed that the variables are stationary at order one. The result further shows there is an equilibrium relationship or stability in the short and long run; furthermore, there is a bidirectional causal relationship between personnel ratio and cost-income ratio. Therefore, the study recommends that the apex bank should enforce policies in the banking sector that will minimize the unit cost of operation – even though they might hire more staff. This is to enhance the stability of the banks in Nigeria and to avoid any threat to their continuity.

Last modified: 2018-03-15 18:42:22