The relationship between market efficiency and performance : the Nigerian banking sector.

Abstract

The relationships between market efficiency and performance are of relevance in Nigeria, but they remain controversial. Hence, this study examined the relationships between banking market efficiency and bank performance between 2011 and 2018. Specifically, the study investigated whether relationships exist between product marketing strategies employed by commercial banks; internal marketing; market orientations; employees’ performance; commercial bank’s competitiveness and performance. The purpose of this study is to contribute further evidence on bank efficiency by defining alternative efficiency measures and investigating the link between such measures and the market performance of financial institutions. The study adopted the survey research design. The population comprised of all male and female employees in all twenty-one (21) commercial banks operating in Nigeria. From sampling frame, there were 14, 084 employees as accessible population in the study. The sample consisted of 400 employees selected through stratified random sampling from six (6) commercial banks with Headquarters in Lagos metropolis. A highly structured self-developed research instrument tagged “Bank Market Efficiency Questionnaire (BMEQ)”was used in the study to collect data. The Statistical Package for the Social Sciences (SPSS) version 24.0 was used for data set and presentation of the data. The descriptive (mean, standard deviation, percentile) and inferential statistics (Pearson Product Moment Correlation and Data Envelopment Analysis) were used to answer research questions and test hypotheses respectively. Data were presented in tables, charts and graphs to illustrate the findings of the study. Specifically, Data Envelopment Aficantlynalysis (DEA) statistical method was used to measure bank efficiency, while Pearson Product Moment Correlation (PPMC) statistical procedure was used to determine the relationship between product marketing strategies employed by commercial banks and their performance; the relationship between marketing efficiency and commercial bank’s performance; the relationship between internal marketing and market orientations of commercial banks; the relationship between internal marketing and employees’ performance in commercial banks; and the relationship between internal marketing and commercial bank’s competitiveness. The results showed that marketing efficiency ratio statistically significantly increased overtime. There was a significant relationship between product marketing strategies employed by commercial banks and their performance. Further, there was a significant relationship between marketing efficiency and commercial bank’s performance. The significant relationship between internal marketing and market orientations of commercial banks was identified. Similarly, there was a significant relationship between internal marketing and employees’ performance in commercial banks. Finally, there was a significant relationship between internal marketing and commercial bank’s competitiveness. The study concluded that market efficiency influences bank performance in the Nigerian banking sector, as marketing remains a veritable tool for attracting customers to buy into various banking services and products in the country. It was recommended that commercial banks should adopt internal marketing to improve bank performance in Nigeria.