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This paper examines the determinants of the exit behaviour of banks in the Nigerian
consolidation program during July 2004 and December 2005. We conceptualise the exit
process in a flexible bivariate competing risks model to examine the importance of
macroeconomic and industry-specific factors for both merged banks and failed banks
jointly. The preliminary results suggest that bank-specific characteristics mattered more
for preventing bank failure than they did for emergence of the M&A banks. Second, the
Central Bank of Nigeria’s assistance was highly influential in preventing bank failure,
and, for banks that benefited, the assistance increased their probability of being merged
or acquired. Also, we found no strong evidence suggesting that the prevailing
macroeconomic conditions and industry-specific factors had influenced exit behaviour
of banks during the consolidation exercise. We found evidence of structural dependence
between failure and merger and acquisition hazards induced by CBN incentive.
