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

• Published in: Banks and bank systems Vol. 12; no. 4; pp. 154 - 162
• Main Authors: Magret Olarewaju, Odunayo, Olawale Olarewaju, Olusola, Moromoke Oladejo, Titilayo, Oseko Migiro, Stephen
• Format: Journal Article
• Language: English
• Published: Sumy Business Perspectives Ltd 2017; LLC "CPC "Business Perspectives
• Subjects: Causality; cost-income ratio (CIR); Economic models; Granger causality; Nigeria banking sector; personnel ratio; Nigeria
• ISSN: 1816-7403; 1991-7074
• DOI: 10.21511/bbs.12(4-1).2017.04

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.