Conscientia Beam || conscientiabeam.com

Export to

Citations

Contact Us

For Marketing, Sales and Subscriptions Inquiries

2637 E Atlantic Blvd #43110
Pompano Beach, FL 33062

USA

Conference List

International Journal of Business, Economics and Management

August 2016, Volume 3, 8, pp 103-112

Market Share and Profitability Relationship: A Study of the Banking Sector in Nigeria

Lyndon M. Etale

Paymaster F. Bingilar

Meshack S. Ifurueze

Lyndon M. Etale¹ ^,

Paymaster F. Bingilar¹ Meshack S. Ifurueze³

Department of Finance and Accountancy, Faculty of Management Sciences, Niger Delta University, Wilberforce Island, Bayelsa State, Nigeria ¹

Department of Accountancy, Faculty of Management Sciences, Anambra State University, Igbariam Campus, Anambra State, Nigeria ³

on Google Scholar

on PubMed

Pages: 103-112

DOI: 10.18488/journal.62/2016.3.8/62.8.103.112

View Citation

1088Views

Create Citation Alert

Abstract:

This study examined the relationship between market share and profitability of the banking sector in Nigeria. The study involved ten banks listed on the Nigerian Stock Exchange (NSE). Secondary data was collected from the NSE covering a period of nine years from 2003 to 2011. The multiple regression analysis was used to test the hypotheses. The dependent variable in the regression model is profitability represented by profit after tax (PAT), while the independent variables are two components of market share for banks: deposit customers (DC) and loan customers (LC). The results of the study revealed that market share represented here by deposit customers (DC) and loan customers (LC) have positive relationship with profitability (PAT) of the banking sector in Nigeria. The researchers recommended that management of banks in Nigeria should entreat quality of management as an important part of market share effect because superior management causes banks to operate at a higher level of effectiveness and efficiency in managing the deposit portfolio and loan volume which in turn will boost profitability.

Contribution/ Originality
This study is one of very few studies which have investigated the causality relationship between deposit volume, risk asset portfolio and profitability. Thus, this study highlighted the importance of identifying high-net-worth customers with integrity and good credit rating whose patronage contributes to the growth of banks and a developing economy.

Keywords:

Market share, Profitability, Deposit customers, Loan customers, Profit after tax.

Video:

Download Video

Download Audio

Reference:

Buzzel, R.D., 2004. The PIMS program of strategic research: A retrospective appraisal. Journal of Business Research, 57(May): 478-483.
Buzzel, R.D., B.T. Gale and R.G.M. Sultan, 1975. Market share a key to profitability. Harvard Business Review, 53(January-February): 97-106.
Firer, C., S.A. Ross, R.W. Westerfiled and B.D. Jordan, 2008. Fundamentals of corporate finance. New York: McGraw-Hill.
Fraering, J.M. and M.S. Minor, 1994. The industry-specific basis of market share-profitability relationship. Journal of Marketing, 11(1): 27-37.
Gale, B.T. and B. Branch, 1982. Concentration versus market share: Which determines performance and why does it matter? Antitrust Bulletin, 27(Spring): 83-106.
Hagigi, M., G.L. Manzon and B. Mascarenhas, 1990. Increase assets efficiency to gain multinational market share. Management International Review, 39(3): 205-222.
Hergert, M., 1984. Market share and profitability: Is bigger really better? Business Economics, 19(5): 45-48.
Jacobson, R., 1988. Distinguishing among competing theories of the market share effect. Journal of Marketing, 52(October): 68-80.
Jacobson, R. and D.A. Aaker, 1985. Is market share all that it’s cracked up to be? Journal of Marketing, 49(fall): 11-22.
Leverty, K.G., 2001. Market share, profits and business strategy. Management Decision, 39(8): 607-617.
McGahan, A.M. and M. Porter, 1997. How much does industry matter, really? Strategic Management Journal, 18(Summer Special Issue): 15-30.
Mueller, D.E., 1986. Profits in the long run. Cambridge: Cambridge University Press.
Newton, J.K., 1983. Market share: Key to higher profitability? Long Range Planning, 16(1): 37-41.
Norreklit, H. and F. Mitchell, 2007. The balanced scorecard in issues in management accounting. 1st Edn., Essex England: Pearson Education Ltd.
O’Regan, N., 2002. Market share: The conduct to future success? European Business Review, 14(4): 287-293.
Pearce, J.A. and R.B. Robinson, 2003. Strategic management. Pennsylvania, USA: McGraw-Hill/Irwin.
Rumelt, R.P., 1991. How much does industry matter? Strategic Management Journals, 12(3): 167-185.
Rumelt, R.P. and R. Wensley, 1981. In search for the market share effect. Proceedings of the Academy of Management. pp: 2-6.
Selling, T.I. and C.P. Stickney, 1989. The effects of business environment and strategy on firm’s rate of return on assets. Financial Analysts Journal, 45(1): 43-68.
Sharp, B.E., J. Riebe, A. Dawes and Danenberg, 2002. A marketing economy of scale: Big brands lose loss of their customer base than small firms. Marketing Bulletin, 13, Research Note 1.
Stead, M., 1995. Management ratios: How they fail shareholders. Management Accounting: Magazine for Chartered Management Accountants, 73(11): 38-39.
Szymanski, D.M., S.G. Bharadwaj and P.R. Varadarajan, 1993. An analysis of the market share profitability relationship. Journal of Marketing, 57(3): 1-18.
Venkatraman, N. and J.E. Prescott, 1990. The market share-profitability relationship: Testing temporal stability across business cycles. Journal of Management, 16(4): 783-805.
Weetman, P., 2006. Management accounting. 1st Edn., Essex England: Pearson Education Ltd.
Weetman, P., 2010. Management accounting. 2nd Edn., Essex England: Pearson Education Ltd.
Woo, C.Y., 1981. Market share leadership –does it always pay off? Proceedings of the Academy of Management. pp: 7-10.