COMPETITION AND FINANCIAL STABILITY OF LISTED DEPOSIT MONEY BANKS IN NIGERIA.

Abstract

The study examined the effect of competition on the financial stability of Deposit money banks

listed on the Nigerian Exchange Group from 2010 to 2019. This results from consistent

decreases in the number of listed banks since the consolidation of DMBs in 2005. The study used

the Lerner index to measure competition, and Z-Score was used to measure the financial stability

of the banks using the data gathered for the 10 years of the study using both descriptive and

inferential statistics of the Random Effect Method. The study revealed that competition exists

among banks in Nigeria and thus affects their financial stability. However, the study hence

recommends that financial innovations should be encouraged by bank CEOs to enable them to

compete among themselves effectively. In conclusion, this study also suggests that regulatory

authorities be up to the task of monitoring the lending rate and policies of banks because too

high-interest rates will increase default rates, which will thus affect the financial stability of

Deposit money banks.