Effect of Recapitalisation on Capital Adequacy of Quoted Deposit Money Bank in Nigeria
Abstract
The objective of this study was to empirically examine the effect of bank recapitalization on capital adequacy of quoted Deposit Money Banks in Nigeria with the aim of finding out weather it has enhanced the capital adequacy of the banks or not. Relevant literatures were reviewed. The study adopted causal research design and data were sourced secondarily from Nigerian Deposit Insurance Corporation (NDIC) annual reports, Banking supervision annual reports in Nigeria. The data were analysed using pooled regression analysis through STATA Window 14 package. The findings of this study indicate that recapitalization has a significant increase on capital adequacy of quoted deposit money Banks in Nigeria. In other words, recapitalization has the incentive to boost the capital adequacy of Deposit Money Banks in Nigeria. The implication of this finding is that recapitalization has made the banks have adequate capital which covered their fixed assets and are able to absorb losses arising from operation cost and that adequate capital can serve as an impetus in fortifying the performance of the Deposit money Banks in Nigeria. It is therefore recommended that capital based of Deposit Money Banks in Nigeria should be based on inflation rate, that is when inflation rate is high the need to increase capital base arise.
Keywords
Recapitalization
shareholders’ fund
capital adequacy
Deposit Money Bank and
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