Bank Consolidation and Scale Economies Trend of Banks in a Developing Country

This study provides a preliminary investigation of scale economies in banks over the period before, during and after bank consolidation in developing world using Nigerian case. It adopts the Data Envelopment Analysis (DEA) for computing scale economies scores of the stable identity banks in the country in 2001-2008. The results revealed that on average, more banks enjoy economies of scale in period of consolidation than in period of 3 years prior to consolidation and 3 years after consolidation. Further, more banks record economies of scale in the pre-consolidation era than in post-consolidation period. Although, the level of economies of scale over the period in the sector is promising, more banks recorded diseconomies of scale. Averagely, foreign banks are scale efficient than domestic banks.