Chapter One — 1.1 Background to the Study

Over the past decade, the relationship between peer-to-peer lending and profitability of deposit money banks has become a subject of considerable debate among scholars and industry practitioners alike, particularly within the context of the Nigerian Oil and Gas Sector where operating conditions differ markedly from more developed markets.

Within the context of the Nigerian Oil and Gas Sector, 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 peer-to-peer lending on profitability of deposit money banks, making a context-specific inquiry both timely and necessary.

1.2 Statement of the Problem

Despite a growing body of literature on peer-to-peer lending, there remains limited consensus on the precise nature of its relationship with profitability of deposit money banks, particularly within the Nigerian Oil and Gas Sector. Many organizations continue to make decisions about peer-to-peer lending without a clear, evidence-based understanding of how those decisions ultimately affect profitability of deposit money banks. This gap between practice and empirical understanding is the central problem this study seeks to address.

1.3 Objectives of the Study

1. To examine the effect of Peer-to-Peer Lending on profitability of deposit money banks in the Nigerian Oil and Gas Sector.
2. To assess the extent to which peer-to-peer lending influences profitability of deposit money banks within the study area.
3. To identify the challenges associated with peer-to-peer lending in relation to profitability of deposit money banks.
4. To recommend strategies for optimizing peer-to-peer lending in order to improve profitability of deposit money banks.

1.4 Research Questions

1. What is the effect of peer-to-peer lending on profitability of deposit money banks in the Nigerian Oil and Gas Sector?
2. To what extent does peer-to-peer lending influence profitability of deposit money banks within the study area?
3. What challenges are associated with peer-to-peer lending in relation to profitability of deposit money banks?
4. What strategies can be adopted to optimize peer-to-peer lending in order to improve profitability of deposit money banks?

1.5 Significance of the Study

This study is significant to a range of stakeholders. For policymakers and regulators, the findings offer evidence to guide the design of frameworks that support healthier outcomes around profitability of deposit money banks. For managers and practitioners within the Nigerian Oil and Gas Sector, the study provides practical insight into how peer-to-peer lending can be better managed. Finally, it contributes to the academic literature on finance / banking by extending existing knowledge into a specific empirical context, and offers a reference point for future researchers.

1.6 Scope of the Study

In terms of scope, this BSc study confines itself to the Nigerian Oil and Gas Sector, focusing specifically on how peer-to-peer lending relates to profitability of deposit money banks within that setting. Findings are interpreted within these boundaries rather than as universal claims applicable to every organization or market.