Chapter One — 1.1 Background to the Study

Over the past decade, the relationship between agency banking and operational efficiency of banks has become a subject of considerable debate among scholars and industry practitioners alike, particularly within the context of Selected Commercial Banks in Nigeria where operating conditions differ markedly from more developed markets.

Within the context of Selected Commercial Banks in Nigeria, this relationship carries particular significance. Organizations in this setting operate under a distinct combination of economic, regulatory, and market conditions that may amplify or dampen the effect of agency banking on operational efficiency of banks, making a context-specific inquiry both timely and necessary.

1.2 Statement of the Problem

While agency banking is widely discussed in policy and industry circles, empirical evidence on its actual effect on operational efficiency of banks within Selected Commercial Banks in Nigeria remains sparse and, in places, contradictory. This lack of localized, rigorous evidence makes it difficult for decision-makers to know with confidence whether current approaches to agency banking are helping or hindering operational efficiency of banks — a gap this study sets out to close.

1.3 Objectives of the Study

1. To examine the effect of Agency Banking on operational efficiency of banks in Selected Commercial Banks in Nigeria.
2. To assess the extent to which agency banking influences operational efficiency of banks within the study area.
3. To identify the challenges associated with agency banking in relation to operational efficiency of banks.
4. To recommend strategies for optimizing agency banking in order to improve operational efficiency of banks.

1.4 Research Questions

1. What is the effect of agency banking on operational efficiency of banks in Selected Commercial Banks in Nigeria?
2. To what extent does agency banking influence operational efficiency of banks within the study area?
3. What challenges are associated with agency banking in relation to operational efficiency of banks?
4. What strategies can be adopted to optimize agency banking in order to improve operational efficiency of banks?

1.5 Significance of the Study

Beyond its academic contribution to the field of finance / banking, this study has practical value for management teams within Selected Commercial Banks in Nigeria seeking to understand how agency banking translates into measurable outcomes around operational efficiency of banks. It is equally useful to students and future researchers looking for a localized empirical reference on this relationship.

1.6 Scope of the Study

The study is limited to an examination of Agency Banking and its relationship with operational efficiency of banks within the context of Selected Commercial Banks in Nigeria. It reflects a MSc-level scope of analysis and relies on data and perspectives available within that scope; generalizing the findings beyond this specific context should therefore be done with appropriate caution.