ABSTRACT
The global financial crisis of 2008 is an event that affected the entire world economic cycle, the consumers, producers, financers and other parties that constitute the economy. The crisis was as a result of liquidity, currency, fluctuations of Banks Share Prices and risks in business with Banks, which started from major financial institutions of the US and spilt over to the rest of the world. These gave birth to the same situations in Nigeria where investors, Bank customers and other citizens were looking at the problems in the financial sector from either political dimensions or from misconceptions about Western economic policies that had dominated Nigeria economic system. The general objective of this study was to investigate the effects of the global financial crisis of 2008 on the performance of bank shares traded in the Stock Exchange Market of Nigeria. The specific objectives were to establish the effects of the GFC on liquidity performance, currency performance, price fluctuations and risk fluctuations in business with banks and measure the price performance of the industry. The study used documented guide line review as instrument in collecting secondary data from audited financial statements of all the 18 money deposit Banks operating 2006 and 2010. Other data collected using same instrument were stock price index reports, control interest rate prices reports, exchange rate reports, value of shares price used for loans collateral reports, annual activity reports on market transaction and other relevant financial policy information from the controlling authorities, such as Central Bank of Nigeria (CBN), Security and exchange Commission (SEC) and Nigeria Stock Exchange Market (NSEM). Data was analyzed using comparison of two sample t test means and variance and sign test was used for testing the hypothesis on each supportive independent variable at a 0.05 level of significance. The results indicated that all the null hypotheses are rejected meaning that 2008 GFC had impact on performance of bank share traded in NSEM. The following recommendations were given as solutions. It is advised that the Federal Government of Nigeria through its control agency mandate all the money deposit banks to keep one quarter of their saving deposits with CBN. This should be different from cash deposit reserved deposit and strictly applicable to saving accounts redeemable bi-annually and should attract a reasonable interest accruable. Another recommendation is that of raising of reserved deposit with at least 50% from it present status at corporate finance level of all the money deposit banks; CBN should also increase in it inspections excises to at least four times in a year which will cover each quarter. Also CBN were advised to reduce the interest rate and improve the interest rate given on saving deposit and many more recommendations
.Finally the following can be further exploit by other researchers. For example the term performance from financial perspective is not restricted to above independent variables neither it is not from the supportive, therefore other areas of performance like banks capital strength, branch networking level of technology, assets strength and others can be study.
Background of the study
CHAPTER ONE INTRODUCTION
Historical evidence shows that the financial crisis in the world economy is not a new issue but an event that recurs after a long period of time. Characteristically this crisis directly or indirectly affects banks and manufacturing firms financially, and cripples their production and consumption level (Sanusi, 2012), Kwanashie, (2008) holds a similar opinion to Sanusi (2012) but also believes that global financial crisis is an event, which lead to the downfall of larger firms and producers while its effects spill over to multi- national companies with businesses across the globe. These effects are reflected by company shares performance in stock exchange markets across the globe.
Bush (2008) described global financial crisis as an economic controversial period where value and volume of economic activities in explicably and rapidly dropped down to an unexpected level, especially quoted equities prices, of which bank shares are inclusive. In his acknowledgment, Oguz (2012) recognized the following factors as global financial crisis; fragility of banking system, inflation trend, devaluation of local currency, Foreign trade deficit, bad loan recorded by the financial institutions, increased in money supply without taking other economic factors in to consideration, excess spending on unprofitable business in the short (e.g spending on war in other countries by super powers) poor economic policy, intervention in the internal politics of other countries and other factors that threatening the world economy, through various ways of which stock exchange market activities is one of them.
