Scientific Papers Series Management, Economic Engineering in Agriculture and Rural Development Vol. 16, Issue 3, 2016 PRINT ISSN 2284-7995, E-ISSN 2285-3952 113 EFFECT OF CONSOLIDATION POLICY IN NIGERIAN BANKING INSTITUTIONS ON AGRIBUSINESS SECTOR PERFORMANCE (1995- 2014) Chinonso Henry ENE, Joseph ONWUMERE Michael Okpara University of Agriculture Umudike, Department of Agribusiness and Management, P.M.B 7267 Umuahia Abia State, Nigeria, Phones: +2348039193563, +2348066004895, Emails: enechinonsohenry@gmail.com, joeofchrist@gmail.com Corresponding author: enechinonsohenry@gmail.com Abstract The broad objective of this study was to analyze the effects of consolidation policy in Nigerian banking institutions on agribusiness sector performance. The specific policies of interest were merger and acquisition policy. The study covered 1995-2014 periods. Secondary data from CBN annual reports and statement of accounts, CBN bulletin and National Bureau of Statistics were used for the study. The data were analyzed by the use of regression models. Findings revealed that merger and acquisition consolidation policy in the Nigerian banking institutions, value of banks loan to agribusinesses, lagged value of national savings, population, rainfall and government capital investment to agribusiness sector significantly influenced agribusiness output in Nigeria within the study period. Merger and acquisition consolidation policy in the Nigerian banking institutions, external reserve, capital formation and agricultural export significantly influenced government credit allocation to agribusinesses in Nigeria within the study period. Merger and acquisition consolidation policy in the Nigerian banking institutions, exchange rate, rate of domestic utilization capacity for agribusiness commodities and population significantly influenced agribusiness export growth in Nigeria within the study period. The study concluded that merger and acquisition consolidation policy in the Nigerian banking institutions influenced the agribusiness sector performance as it leads to increase in both agribusiness output and government credit allocation to agribusinesses in Nigeria but did not lead to increase in agribusiness export growth. The study recommended that consolidation policy of the Nigerian banking institutions which led to increase in credit allocation to agribusinesses in Nigeria as well as improved agribusiness output must be sustained by the Central Bank of Nigeria and even made better in such manners that agribusiness output will grow and allow the country to make huge foreign income from agribusiness export especially now that the revenue from oil is on the decrease in the country. Key words: agribusiness sector performance, banking institutions, consolidation, policy INTRODUCTION Policy is a deliberate intervention, a course of action taken by government, or financial institutions, management, an individual, to influence or arrive at pre-determined outcomes. Policies are diversified in nature and scope. According to [9], the relevant policies in the banking institution to agriculture included, direct credit to the agricultural sector on concessionary terms; the rural banking scheme in 1977 under which designated commercial banks were required to open specified numbers of rural branches in different parts of the country and with at least 40% of the total deposits in these rural banks lent to borrowers within those rural areas; Agricultural Credit Guaranteed Scheme Fund (ACGSF), which was aimed at reducing the risk borne by commercial banks in extending credit to farmers. Consolidation in the banking system is a global phenomenon, which is said to have started in advanced economies many years ago. The need for a strong, reliable and viable banking system in Nigeria is under-scored by the fact that the industry is one of the few sectors in which the shareholders' fund is only a small proportion of the liabilities of the enterprise. It is therefore, not surprising that the banking institution is one of the most regulated sectors in any economy. It is against this background that the Central Bank of Nigeria (CBN) outlined the first phase of its banking sector reforms designed to ensure a diversified, strong and reliable banking