THE EFFECT OF BANK RECAPITALIZATION ON THE ECONOMY OF NIGERIA
ABSTRACT
The resultant impact of financial liberalization opened up the Nigerian economy to global financial markets, which has generated increasing apprehension in the economy and has exposed the fragility and vulnerability of her financial system. It is therefore imperative for the Central Bank of Nigeria to introduce measures that will reduce the exposure and enhance the stability of small business operators in Lagos State and the nation’s financial system. A defensive measure that will strengthen the existing banks and still provide small businesses with financial facilities and services, is what is really needed. This study investigated the impact of previous recapitalization in the banking system on the performance of some selected small businesses in the country with the aim of finding out if the recapitalization is of any benefit. The study employed both primary and secondary data obtained from responses gotten from issued questionnaires and NDIC annual reports. The data were analyzed using both descriptive e.g. means and standard deviations and analytical techniques such as the t-test and the test of equality of means. It was found that the mean of key profitability ratio such as the Yield on earning asset (YEA), Return on Equity (ROE) and Return on Asset (ROA) were significant meaning that there is statistical difference between the mean of the bank before 2001 recapitalization and after 2001 recapitalization. The study recommends that the banks should improve on their total asset turnover and to diversify their funds in such a way that they can generate more income on their assets, so as to improve their return on equity.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Over the years, the Nigerian economy is faced with national and global economic challenges and as such, the financial institutions, especially the banking sector has an option of sanitizing and restructuring its operational processes in order to survive the depressed economy, as well as embarking on a consolidation exercise which would have some wider structural effects on the industry and on the economy as a whole.
Basically, banking is a service industry operated by human beings for the benefit of the general public while making returns to the shareholders. As such, it is natural that the services provided thereof by the industry cannot be 100% efficient; however, there is always a room for improvement. It is on this statement that the index of our further discussion on this study is based.
