Capital Adequacy and Banking Performance in a Post – Consolidation Era: A Study of Selected Nigerian Banks

Obianuju Edith Ndu-Okereke, John Okey Onoh


This research study was conducted on capital adequacy and banking performance, its opportunities and challenges for Nigeria Economic Development. The study examined how the banking sector performed a decade after the 2005 banking recapitalization, the problems associated with the profitability and efficiency of banks. The study utilized regression using E-views statistical package. The Durbin Watson statistics indicated that the successive error terms are close to one another on the average. This means that there is positive serial correlation. The Akaike and Schwarz criteria criterion shows that the difference between the two is very negligible, an indicator of a near perfect model convergence near zero. The correlation coefficient R2 for each of the banks studied indicated that most of the variations in the dependent variables were explained in the independent variable. The model’s goodness of fit adjudged reliable. It became apparent from the findings that the banking sector reforms in 2005 significantly impacted on the lending rates, deposits and profitability. The study recommends that various macroeconomic and institutional problems facing the Nigerian economy, which include inappropriate macroeconomic policies, inadequate policy coordination, social -political instability, high cost of doing business and multiple taxes and levies should be tackled with new bank reforms to increase capital and reduce undue risks.

Keywords: Capital Adequacy, banking performance, post-recapitalization era and Nigerian banks

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ISSN (Paper)2224-607X ISSN (Online)2225-0565

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