SSRG International Journal of Economics and Management Studies Volume 8 Issue 6, 77-84, June, 2021 ISSN: 2393 – 9125 /doi: 10.14445/23939125/IJEMS-V8I6P112 © 2021 Seventh Sense Research Group® This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-nc-nd/4.0/) Globalization and Banking Sector Performance In Nigeria (1981-2019) Abiodun Thomas Ogundele #1 , Dr. Tonia Yetunde Akindutire *2 , Dr. Segun Ilegbusi #3 1 Lecturer, Department of Banking &Finance, Afe Babalola University, Ado-Ekiti, Nigeria 2 Seniour Lecturer, Department of Banking &Finance, Afe Babalola University, Ado-Ekiti, Nigeria 2 Seniour Lecturer, Department of Banking &Finance, Afe Babalola University, Ado-Ekiti, Nigeria Received Date: 13 May 2021 Revised Date: 14 June 2021 Accepted Date: 25 June 2021 Abstract Deposit money banks perform their intermediation functions in the face of globalization, which can have a positive or negative impact on their activities. This study looked at the impact of globalization on the banking sector performance in Nigeria, using secondary data from the Central Bank of Nigeria's Statistical Bulletin from 1981 to 2019. The Augmented Dickey-Fuller (ADF), Bound Test, and Autoregressive Distributed Lag models were used in the study to assess the impact of foreign direct investment, trade openness, and exchange rate on return on asset. The result revealed that trade openness, foreign direct investment, and exchange rate all have a positive relationship and effect on deposit money banks. The causality result revealed that trade openness and foreign portfolio investment did not granger cause return on asset, whereas exchange rate granger caused return on asset. As a result, the study concluded that globalization has had a significant impact on the Nigerian banking sector. The study recommended that the government create an enabling environment, such as tax breaks and social infrastructure, to encourage the inflow of foreign direct investment. Keywords: Deposit money banks, economic growth financial sector, globalization, liberalization, , I. INTRODUCTION The need for interdependency and cooperation among the nations of the world has resulted in the need to open an economy to their foreign counterpart. Because of the increasing interdependence among world nations as a result of globalization, the link between the local financial system and the global financial system has grown in recent years. (Akinwale & Adekunle, 2019). Through globalization, the communication barriers and costs in connecting and harmonizing major economies are lifted and nations can seek assistance and help from other nations through the formulation and implementation of policies framework that can supports free the flow of trades and financial supports (Ajayi & Atanda, 2012). Globalization may be defined as a a phenomenon that involves the integration and harmonization of the world economy through cooperation and interdependency which result in economic, political and social benefits. According to Njanike (2010), globalization is the process of strengthening and harnessing cross boarders potentials and cooperation through the economic, political, social and cultural integration of the economy to promote growth and development. Bari (2010) opined that globalization arises due to global challenges which result in the demand for a global solution through the dynamic process of enlarging and deepening of world interrelation and coexistence through economic, political, social and cultural diversity thereby resulting in economic benefits in terms of trade, capital and technological flow. Globalization has continued to gain prominence and attentions of scholars, policymakers and practitioner especially after the Great World War II which calls for the need for peaceful coexistence and integration of nations for mutual and global benefits. Ozughalu and Ajayi (2007) submitted that globalization resulted in the harmonization and integration of major economic system and policy among independent nations through the establishment of structure and mechanism that supports and smoothens international dependency and interconnection to create the global marketplace. The banking sector of an economy forms an important sector in a nation’s financial system. The banking sector plays important role in the mobilization and channelling of funds among economic units for productive and investment purpose. Thus, the intermediation function of the banking sector is highly germane to achieve sustainable growth and development. Appraising the role of the banking sector in the economy, Achimugu, Yunusa and Samson (2015) asserted that the bank sector facilitates the activities of trade, commerce, communication and cross broader transactions which are all germane to prosper an economy in terms of the industrial revolution, economic growth and development. Thus, the role of the banking sector in harmonizing and revitalizing every sector of the economy cannot underestimate.