Tag Archives: Business Global Best Practices

Effects of Recapitalisation on Commercial Banks Survival in Nigeria: Pre and Post Camel Anaylsis (Published)

This paper examined the analysis effects of recapitalization on commercial banks survivals in Nigerian: pre and post camel analysis. This is because the banking industry in Nigeria has witnessed a lot of transformation as a result of the restructuring programmes channeled towards resolving the existing problems of the industry by the central bank of Nigeria. The banking consolidation and recapitalization of commercial banks exercise which has shaped the structure of the Nigerian banking industry significantly. This was driven by the need to strengthen the banking sector and reposition the banks to be strong in order to meet up with the internationalization of financial and business globalization best practices. The exercise was deemed necessary because having a strong capital base increasing their ability to assume risk and absorb losses. The study used an Ex-post-facto research design comprising of pooled data which employs the use of secondary data covering a thirteen years period pre and post recapitalization (2006- 2012) using 10 out of the 25 banks that emerged after the transformation to test the effect of the reform . Chow test was used to check for structurally difference between the pre and post period using CAMEL framework as indicators for measurement. The result of the regression model of Minimum capital base on capital adequacy, asset quality, management quality and earnings quality and liquidity indicated an increase after recapitalization and consolidation but only Capital adequacy and management quality had a structurally difference with the increment. Based on the findings, it is discovered that recapitalization and consolidation is a welcome development that is needed by the banks but it cannot stand alone in achieving all round soundness and stability desired by Central Bank of Nigeria, little thereafter we are still faced with the post 2006 distress of banks even after the huge recapitalization reform and the Central Bank of Nigeria bailing out 8 banks with over 400 billion in 2012. Therefore, we recommend among other things the strict compliance to corporate governance practices, zero tolerance on misreporting and fraudulent practices, enforcing laws like the liabilities of board members of failing banks and finally, every business needs an enabling environment to enhance profitability.

Keywords: Business Global Best Practices, Corporate Governance, Recapitalization Reform