Effect of Contributory Pension Scheme on the performance of banks in South East, Nigeria

This study examined the effect of the Contributory Pension Scheme (CPS) on the performance of banks in South East Nigeria. Specifically, it investigated the effect of CPS on deposit mobilization, growth of asset management portfolios, and improvement in liquidity and capital base of selected banks. The study was anchored on the Financial Intermediation Theory propounded by Gurley and Shaw (1960), which explains the role of financial institutions in mobilizing savings and allocating funds efficiently. A descriptive survey research design was adopted. The population comprised 943 employees drawn from five selected banks operating Pension Fund Administrators (PFAs) in South East Nigeria, while a sample size of 281 respondents was determined using Yamane's formula. Data were collected through structured questionnaires validated by experts, with a Cronbach's Alpha reliability coefficient of 0.87, indicating high internal consistency. Descriptive statistics (mean and standard deviation) and regression analysis were employed to analyze the data and test the hypotheses. The findings revealed that the Contributory Pension Scheme has a significant positive effect on deposit mobilization, significantly enhances the growth of banks' asset management portfolios, and significantly improves banks' liquidity and capital base in South East Nigeria. The study concluded that CPS has substantially improved the performance of banks by providing stable long-term funds, strengthening financial stability, and enhancing operational efficiency. The study recommended stronger collaboration between banks and Pension Fund Administrators to ensure efficient pension fund management, increased regulatory oversight by the National Pension Commission (PenCom) to promote transparency and compliance, and greater diversification of pension fund investments into low-risk and productive sectors to enhance sustainable banking performance.