Consolidation and Business Valuation of Nigeria Banks: What Consequence on Liquidity Level?
Kenneth Enoch Okpala

Abstract
Inadequate capital and low liquidity level in recent times within the banking sector has created room for financial crises negatively affecting investments and limiting banks’ ability to finance transactions that requires huge investment outlay especially in multinational arena. This study investigated the association between consolidation and business valuation and their effect on capital and liquidity level of banks in Nigeria. The population of the study consists of twenty-two (22) banks with randomly chosen staff strength of 220 who are independent of age and sex. Data were collected through structured questionnaire and analyzed. Person product moment correlation “r” was employed to validate the research questions and hypotheses of the study. Results revealed that consolidation exercise increased bank capital without liquidity due business valuation methods used. The result obtained confirmed that there is significant positive association between consolidation and business valuation but could not influenced liquidity. This is contrary to the already established banks risk absorption hypothesis and risk-transformation role that stated which that higher capital enhances banks’ ability to create liquidity. The study concluded that consolidation did not positively influenced liquidity level in Nigeria banks.

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