The Impact of the New Capital Adequacy Requirement on the Nigerian Banking System

George, Dorcas (2007) The Impact of the New Capital Adequacy Requirement on the Nigerian Banking System. [Dissertation (University of Nottingham only)] (Unpublished)

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In today's dynamic and complex financial system, safety and soundness can mainly be achieved through efficient management of banks, market discipline and effective prudential supervision. Most emerging economies like Malaysia, Turkey, Nigeria and others have been undergoing series of profound reforms in their financial sector. The common characteristics of these countries that have necessitated the reforms are as a result of financial instability and weak or fragile financial system. One of the recent banking reforms in Nigeria in July 2004 mandated an upward review of the minimum capital which was for the purpose of strengthening the banks and gaining stability in the financial sector.

Common to empirical studies and theoretical arguments on the issue of recapitalisation, it has been observed that recapitalisation has a far reaching effect on the banking sector as well as the economy. Taking a look at the Nigerian banking industry, most of the resultant problems of financial instability are not solely dependent on the capital adequacy although it has proven to be a major factor in financial stability.

This study provides an assessment of the impacts of the new capital requirement in Nigeria. The main objective is to identify the reasons for and impacts of the new regulation and the reactions of the banks. In order to achieve these objectives, the qualitative method of research was adopted using semi-structured interviews and desk based research where references were drawn from past studies and published reports. All the banks were used in this research from where the data was gathered with discussions on the pre and post recapitalisation periods. Owing to the fact that this reform is in its relatively early stage, some of the expected benefits of recapitalisation may take some time to be realised and if the banks are not effectively supervised, there may be unanticipated problems difficult to deal with.

Item Type: Dissertation (University of Nottingham only)
Depositing User: EP, Services
Date Deposited: 19 Nov 2007
Last Modified: 21 Mar 2022 16:04

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