This document examines the effect of capital adequacy requirements on the profitability and performance of Nigerian banks from 1999-2008. It analyzes the relationship between capital adequacy ratios and various performance indicators like return on assets, return on capital employed, and efficiency ratios. The study finds that increases in banks' capital bases did not significantly improve their profitability or performance. This suggests that simply increasing capital requirements is not enough and other factors like corporate governance, personnel training, and macroeconomic stability also influence banks' financial health. The paper recommends pragmatic reforms in these areas to help ensure soundness in the Nigerian banking sector.
Capital adequacy ratio and banking risks in the nigeria money deposit banksAlexander Decker
1) The document examines the relationship between capital adequacy ratio (CAR) and banking risks in Nigerian banks from 2007-2011. It uses regression analysis to analyze how CAR is affected by risk-weighted asset ratio, deposit ratio, and inflation rate.
2) The results show there is a significant negative relationship between risk levels and CAR, meaning higher risks are associated with lower CAR. There is also a negative relationship between deposits and CAR, so increased deposits do not necessarily increase CAR.
3) The study recommends Nigerian banks adopt a risk-based approach to managing capital instead of just focusing on paid-up capital and earnings. It also recommends banks improve approaches to protect depositor money since deposits do not always increase
Liquidity management and commercial banks profitability in nigeriaAlexander Decker
This document summarizes a research study that examined the relationship between liquidity management and profitability in commercial banks in Nigeria. The study found that liquidity and profitability are significantly related, with each influencing the other. Effective liquidity management is important for banks' success and survival, as both insufficient and excessive liquidity can erode profitability. The study recommends that central banks maintain a flexible interest rate policy to help banks manage liquidity and profitability, and promote alternative payment methods to reduce banks' need to hold excess cash reserves.
Assessing the effect of liquidity on profitability of commercial banks in kenyaAlexander Decker
This document discusses factors that affect the profitability of commercial banks in Kenya. It provides background on the banking sector in Kenya and reviews various theories on factors that influence bank profitability, including market power theory, efficiency structure theory, and the Modigliani-Miller theorem. The study aimed to determine the effect of internal factors like liquidity on the profitability of commercial banks in Kenya. It found that liquidity has a statistically significant and positive relationship with bank profitability.
The Impact of Liquidity on Profitability on Selected Banks of Bangladesh Samia Ibrahim
This research seeks to establish a relationship between liquidity and profitability which may assess in liquidity management in the banks in Bangladesh.There has been a wide range of study on the concepts of liquidity and profitability. My research differs from the previous works as such research was not done in the context of Bangladeshi banking sector using recent data.
This document discusses a study analyzing the financial performance of selected private sector banks in Bangladesh in light of capital levels. The study examines the impact of factors like total capital/assets, risk-weighted assets, core capital/assets, equity capital/assets, and cost income ratio on the banks' returns on assets and equity. Annual data from 2008-2012 for three banks was used in multiple regression analysis. The study aims to determine if capital adequacy and cost income ratio influence bank profitability, and if Basel II requirements have been effective in reducing non-performing loans and bankruptcy risks in Bangladeshi banks. Previous literature suggests capital adequacy can impact lending, performance, and bankruptcy risk, but markets may better determine optimal capital levels.
A nexus between liquidity & profitability a study of trading companies in sri...Alexander Decker
This document summarizes a study that investigated the relationship between liquidity and profitability of trading companies in Sri Lanka. The study analyzed annual report data from 8 listed trading companies over a 5-year period from 2008 to 2012. Correlation and regression analyses were used to examine the nature and extent of the relationship between liquidity ratios like current ratio and quick ratio and profitability ratios like return on equity and return on assets. The findings suggest there is a significant relationship between liquidity and profitability among the sampled trading companies in Sri Lanka. However, the results may not be generalizable to non-public companies or other sectors. The document provides background on liquidity, profitability, prior studies on the relationship, and the methodology used
Econometrics Analysis of Capital Adequacy Ratios and the Impact on Profitabil...iosrjce
This paper examines the econometrics analysis of capital adequacy ratios and the impact on the
profitability of Commercial Banks in Nigeria from 1980 – 2013. The objective is to investigate whether there is
a dynamic long run relationship between capital adequacy ratios and the profitability of commercial banks.
Time series data were sourced from Stock Exchange factbook and financial statement of quoted commercial
banks and the Johansen co-integration techniques in vector error correction model setting (VECM) as well as
the granger causality test were employed. The study has Return on Asset (ROA), Return on Investment (ROI)
and Return on Equity (ROE) as the dependent variables and the independent variables are Adjusted Capital to
Risk Asset Ratio (ACRR), Capital to Deposit Ratio (CTD), Capital to Net Loans and Advances Ratio (CNLAR),
Capital to Risk Asset Ratio (CRA) and Capital to Total Asset Ratio (CTAR). The empirical result demonstrated
vividly in the models that there is a positive long run dynamic and significant relationship between return on
asset and capital to risk asset ratio and capital to deposit ratio while others are negatively correlated. The
findings also revealed that there is bi-directional causality running from ROA to ACRR and ROA to CNLAR. We
therefore recommend that financial policies should be strengthened to deepen the capital base of Nigerian
Commercial banks to enhance bank profitability and sustain economic growth.
Capital adequacy ratio and banking risks in the nigeria money deposit banksAlexander Decker
1) The document examines the relationship between capital adequacy ratio (CAR) and banking risks in Nigerian banks from 2007-2011. It uses regression analysis to analyze how CAR is affected by risk-weighted asset ratio, deposit ratio, and inflation rate.
2) The results show there is a significant negative relationship between risk levels and CAR, meaning higher risks are associated with lower CAR. There is also a negative relationship between deposits and CAR, so increased deposits do not necessarily increase CAR.
3) The study recommends Nigerian banks adopt a risk-based approach to managing capital instead of just focusing on paid-up capital and earnings. It also recommends banks improve approaches to protect depositor money since deposits do not always increase
Liquidity management and commercial banks profitability in nigeriaAlexander Decker
This document summarizes a research study that examined the relationship between liquidity management and profitability in commercial banks in Nigeria. The study found that liquidity and profitability are significantly related, with each influencing the other. Effective liquidity management is important for banks' success and survival, as both insufficient and excessive liquidity can erode profitability. The study recommends that central banks maintain a flexible interest rate policy to help banks manage liquidity and profitability, and promote alternative payment methods to reduce banks' need to hold excess cash reserves.
Assessing the effect of liquidity on profitability of commercial banks in kenyaAlexander Decker
This document discusses factors that affect the profitability of commercial banks in Kenya. It provides background on the banking sector in Kenya and reviews various theories on factors that influence bank profitability, including market power theory, efficiency structure theory, and the Modigliani-Miller theorem. The study aimed to determine the effect of internal factors like liquidity on the profitability of commercial banks in Kenya. It found that liquidity has a statistically significant and positive relationship with bank profitability.
The Impact of Liquidity on Profitability on Selected Banks of Bangladesh Samia Ibrahim
This research seeks to establish a relationship between liquidity and profitability which may assess in liquidity management in the banks in Bangladesh.There has been a wide range of study on the concepts of liquidity and profitability. My research differs from the previous works as such research was not done in the context of Bangladeshi banking sector using recent data.
This document discusses a study analyzing the financial performance of selected private sector banks in Bangladesh in light of capital levels. The study examines the impact of factors like total capital/assets, risk-weighted assets, core capital/assets, equity capital/assets, and cost income ratio on the banks' returns on assets and equity. Annual data from 2008-2012 for three banks was used in multiple regression analysis. The study aims to determine if capital adequacy and cost income ratio influence bank profitability, and if Basel II requirements have been effective in reducing non-performing loans and bankruptcy risks in Bangladeshi banks. Previous literature suggests capital adequacy can impact lending, performance, and bankruptcy risk, but markets may better determine optimal capital levels.
A nexus between liquidity & profitability a study of trading companies in sri...Alexander Decker
This document summarizes a study that investigated the relationship between liquidity and profitability of trading companies in Sri Lanka. The study analyzed annual report data from 8 listed trading companies over a 5-year period from 2008 to 2012. Correlation and regression analyses were used to examine the nature and extent of the relationship between liquidity ratios like current ratio and quick ratio and profitability ratios like return on equity and return on assets. The findings suggest there is a significant relationship between liquidity and profitability among the sampled trading companies in Sri Lanka. However, the results may not be generalizable to non-public companies or other sectors. The document provides background on liquidity, profitability, prior studies on the relationship, and the methodology used
Econometrics Analysis of Capital Adequacy Ratios and the Impact on Profitabil...iosrjce
This paper examines the econometrics analysis of capital adequacy ratios and the impact on the
profitability of Commercial Banks in Nigeria from 1980 – 2013. The objective is to investigate whether there is
a dynamic long run relationship between capital adequacy ratios and the profitability of commercial banks.
Time series data were sourced from Stock Exchange factbook and financial statement of quoted commercial
banks and the Johansen co-integration techniques in vector error correction model setting (VECM) as well as
the granger causality test were employed. The study has Return on Asset (ROA), Return on Investment (ROI)
and Return on Equity (ROE) as the dependent variables and the independent variables are Adjusted Capital to
Risk Asset Ratio (ACRR), Capital to Deposit Ratio (CTD), Capital to Net Loans and Advances Ratio (CNLAR),
Capital to Risk Asset Ratio (CRA) and Capital to Total Asset Ratio (CTAR). The empirical result demonstrated
vividly in the models that there is a positive long run dynamic and significant relationship between return on
asset and capital to risk asset ratio and capital to deposit ratio while others are negatively correlated. The
findings also revealed that there is bi-directional causality running from ROA to ACRR and ROA to CNLAR. We
therefore recommend that financial policies should be strengthened to deepen the capital base of Nigerian
Commercial banks to enhance bank profitability and sustain economic growth.
This document discusses a study on the effect of capital structure on the profitability of conventional and Islamic banks in Pakistan. The study examines the relationship between capital structure factors like total liabilities to total assets, total equity to total assets, total liabilities to total equities, and bank size with profitability measures like return on equity and return on assets. Annual reports from 5 Islamic banks and 5 conventional banks between 2010-2014 are analyzed using statistical tools like correlation analysis and t-tests. The study aims to compare the capital structure and its impact on profitability between conventional and Islamic banks in Pakistan and help policymakers. Limitations and the thesis structure are also outlined.
Trend analysis of the effect of capital base requirement on profit generating...Alexander Decker
This document summarizes a research study examining the relationship between capital base requirements and the profitability and operational efficiency of commercial banks in Nigeria from 1992 to 2007. The study utilized secondary data on key performance indicators of banks such as total income, interest rates, total credits, and branch networks. Descriptive statistical techniques were used to analyze trends in these indicators in relation to changes in bank capital levels over the period. The results showed that capital base requirements in Nigeria were ineffective in reducing banking distress and that requirements often lagged average capital levels. The study concluded that increasing capital base requirements through regulatory power could stimulate greater profitability and efficiency in the Nigerian banking sector.
1. The document discusses modern banking strategies for managing risk and selecting profitable investment portfolios. It addresses questions about optimal portfolio structure in variable interest rate environments, appropriate banking products, and successful risk management.
2. Banks can calculate expected returns on asset groups to inform investment decisions, though some may prefer lower risk assets even with similar expected returns. Duration matching of assets and liabilities can help mitigate interest rate risk.
3. Banks employ tools like gap analysis, repricing schedules, and derivatives to manage their exposure to interest rate movements and ensure accurate understanding of risks from their asset-liability mix. Portfolio structure and risk management techniques are crucial for banks' financial stability and performance.
This document summarizes a study that investigated the determinants of commercial bank lending behavior in Nigeria. The study aimed to test how common factors like deposits, investments, interest rates, reserve requirements, and liquidity ratios affect bank lending. Regression analysis found the model to be significant, with deposits having the greatest impact on lending. The study suggests banks focus on deposit mobilization to enhance lending performance and develop strategic plans.
Macroeconomic factors that affect the quality of lending in albania.Alexander Decker
This document analyzes the relationship between macroeconomic factors and credit quality in the Albanian banking system from 2005 to 2013. It finds that non-performing loan rates increased, influenced by the economic slowdown after 2008 and currency depreciation. Unemployment, lower GDP growth, reduced remittances, and inflation stability negatively impacted borrowers' ability to repay loans. A regression analysis showed credit risk significantly increased when GDP growth declined and interest rates rose. Macroeconomic changes, like deteriorating GDP growth, substantially affected the level of non-performing loans in Albanian banks.
This document provides background information and context for a study examining the determinants of banking crises in Nigeria. It begins with an introduction that discusses the important role of banks in economic growth and development. However, it notes that banking nowadays faces many challenges that can lead to crises.
The document then reviews literature on past banking crises in Nigeria. It discusses factors that previous studies have identified as contributing to crises, such as lack of transparency, capital inadequacy, and non-performing loans. It also outlines the objectives, research questions, and hypotheses that will guide the current study.
Finally, the document provides operational definitions of key terms and concludes Chapter 1 by discussing the significance, scope, and limitations
This document summarizes a study that examined the determinants of commercial bank lending in Ethiopia between 2005-2011. The study tested whether bank size, credit risk, GDP, investment, deposit, interest rate, liquidity ratio, and cash reserve requirements influenced bank lending. It found that bank size, credit risk, GDP, and liquidity ratio had a significant relationship with lending, but deposit, investment, interest rate, and cash reserves did not. The study suggests banks focus on managing credit risk and liquidity to support lending.
This thesis investigates the determinants of lending behavior among commercial banks in Ethiopia. The author conducted a case study of eight commercial banks over the period of 2001 to 2013. Through a panel data regression analysis, the author found that deposit volume and bank size had a positive and significant impact on loans and advances. Liquidity ratio and interest rate had a negative and significant impact. Cash reserve requirements and inflation rate had a positive impact, though the relationship was unexpected. GDP growth did not have a statistically significant impact. The study suggests commercial banks focus on deposit mobilization to enhance lending.
Effect of Deposit Money Bank Failure on Economic Development of Nigeria, 2009...ijtsrd
This document discusses the effect of bank failure on Nigeria's economic development from 2009-2019. It begins by establishing that banks play a vital role in providing capital for investment and improving economic well-being, so their collapse can negatively impact economic development. The study uses data from the Nigeria Deposit Insurance Corporation and Central Bank of Nigeria to examine the relationship between bank failure factors like non-performing loans, capital adequacy ratios, and liquidity ratios on unemployment rates. The results found that bank failure Granger causes unemployment in Nigeria over the period studied. The study recommends that banks maintain adequate capital levels and collateral for loans to avoid failures that could undermine economic development.
CREDIT QUALITY IN INDIAN BANKING :QUANTITATIVE EVALUATIONDinabandhu Bag
This document summarizes a study examining factors that influence credit quality and non-performing loans in Indian banking. The study finds:
1) Both economic factors and bank-specific factors like capital adequacy ratios and credit deposit ratios influence credit quality and non-performing assets.
2) Analyzing data from 2002-2007 for 17 major Indian banks, the study finds higher capital adequacy ratios and credit deposit ratios are associated with lower non-performing loans.
3) Stronger economic growth, as measured by GDP growth, is also associated with lower non-performing loans for banks. The results provide insights into how banks can maintain better credit quality.
The banking sector in Pakistan has undergone significant changes since independence in 1947. It initially suffered from a lack of resources and trained professionals. The State Bank of Pakistan was established in 1948 as the central bank. In the 1970s, all banks were nationalized but their performance deteriorated. Reforms in the early 1990s privatized many banks. Today, Pakistan's banking sector plays a key role in the economy. It includes commercial, specialized, microfinance and Islamic banks. The sector has expanded services and introduced new payment methods in recent years. Reforms have created an efficient, competitive system dominated by private banks rather than state-owned banks.
Determinants of commercial banks profitability panel data evidence from pakistanAlexander Decker
This document summarizes a research study that investigated the determinants of commercial bank profitability in Pakistan from 2004-2010. The researchers used multiple regression analysis on a sample of 5 major commercial banks to determine the relationship between return on assets (the dependent variable) and various internal and external independent variables. The results indicated that internal factors like liquidity, efficiency, asset composition, deposit composition, and external factors like firm size had a significant impact on bank profitability. The study adds to the limited literature on factors influencing bank performance in Pakistan.
This document discusses empirical research on the determinants of bank lending across countries. It proposes estimating equations to model domestic credit levels based on bank balance sheet and capital requirements approaches. The analysis will use data from 146 countries over 1990-2013 to examine how economic growth, banking system health, and external capital flows influence domestic credit after controlling for other factors. Key determinants expected to impact credit include deposits, interest rates, costs, capital levels, and macroeconomic conditions.
This document analyzes the performance and competitive position of state-owned commercial banks in Bangladesh from 2009-2012. It finds that while these banks have achieved stable growth in deposits, loans, and branches, they have struggled to improve key financial metrics like net profit, returns, and reducing non-performing loans. Trend analysis found positive growth in some areas but negative trends or low correlation for other financial indicators. The study aims to evaluate these banks' performance, conduct competitive analysis, and provide recommendations for improvement. Secondary data is used from annual reports and other sources to analyze metrics and compare the four largest state-owned commercial banks in Bangladesh.
Effect of privatization on banking sector performance in pakistanAlexander Decker
This document summarizes a research paper on the effects of privatization on the banking sector performance in Pakistan. The paper finds that privatization had a positive effect on Habib Bank Limited (HBL) performance. After being privatized, HBL showed improved financial ratios compared to before privatization, such as higher return on assets and lower non-performing loans. However, other banks did not see the same benefits of privatization as HBL. The document recommends that other banks follow HBL's policies and strategies to improve their performance after privatization.
Determinants of banks’ profitability in a developing economyAlexander Decker
This document investigates the factors that affect bank profitability in Tanzania. It uses a fixed effects regression model on panel data from 23 banks over the period of 2009 to 2013. The empirical results show that bank-specific factors, which are influenced by bank management decisions, significantly impact bank profitability in Tanzania. However, macroeconomic factors do not seem to significantly affect bank profitability. Therefore, bank profitability in Tanzania is mainly influenced by internal management decisions, while external macroeconomic conditions have an insignificant effect. The study aims to provide insight to policymakers and bank managers on how to improve long-term profitability.
Cuhk advd prog on basel iii sheng (final)Andrew Sheng
Basel III aims to standardize minimum capital and liquidity standards globally, but its implementation in Asia faces several issues and concerns:
1) Tighter standards could potentially slow Asian growth and trap the global economy in a synchronized recession if Asia's access to credit is constrained.
2) Basel's risk-weightings favor advanced banks and are biased against Asian banks, as Asian banks are less sophisticated and rely more on standard models which automatically assign higher capital costs compared to European banks.
3) Credit ratings are also biased against Asian banks and economies, as they have lower sovereign ratings which translate to much higher capital requirements to support the same amount of loans or bonds. National discretion and priorities need to be considered for
best material for ank exam 2014 ibps po best exam tips from gr8dreamz.com website, best material for ank exam 2014 ibps po best exam tips from gr8dreamz.com website, best material for ank exam 2014 ibps po best exam tips from gr8dreamz.com website,
This thesis examines the capital adequacy norms set by Nepal Rastra Bank (NRB) for commercial banks in Nepal and their impact on Bank of Kathmandu Ltd (BOK) and Himalayan Bank Ltd (HBL). The thesis presents data on the capital funds, risk-weighted assets, deposits, and credits of BOK and HBL. It analyzes capital adequacy ratios, capital to deposit ratios, and credit to deposit ratios. Correlation coefficients and hypothesis testing are used to statistically analyze the relationship between capital funds and deposits/credits. The findings suggest the NRB capital adequacy norms have impacted the capital funds of BOK and HBL.
The document discusses capital adequacy norms and concepts related to banking in India. Some key points:
- Capital Adequacy Ratio (CAR) refers to the ratio of a bank's capital to its risk assets and is used to protect depositor and shareholder interests.
- The Basel Committee prescribed international capital adequacy norms. In India, the Narasimham Committee recommended banks maintain a minimum CAR of 8-10%.
- CAR is calculated based on risk-weighted assets, with different asset classes assigned risk factors. Capital is divided into Tier 1 (core) and Tier 2 categories.
- Asset-liability management aims to manage a bank's balance sheet to allow for interest rate
This document discusses a study on the effect of capital structure on the profitability of conventional and Islamic banks in Pakistan. The study examines the relationship between capital structure factors like total liabilities to total assets, total equity to total assets, total liabilities to total equities, and bank size with profitability measures like return on equity and return on assets. Annual reports from 5 Islamic banks and 5 conventional banks between 2010-2014 are analyzed using statistical tools like correlation analysis and t-tests. The study aims to compare the capital structure and its impact on profitability between conventional and Islamic banks in Pakistan and help policymakers. Limitations and the thesis structure are also outlined.
Trend analysis of the effect of capital base requirement on profit generating...Alexander Decker
This document summarizes a research study examining the relationship between capital base requirements and the profitability and operational efficiency of commercial banks in Nigeria from 1992 to 2007. The study utilized secondary data on key performance indicators of banks such as total income, interest rates, total credits, and branch networks. Descriptive statistical techniques were used to analyze trends in these indicators in relation to changes in bank capital levels over the period. The results showed that capital base requirements in Nigeria were ineffective in reducing banking distress and that requirements often lagged average capital levels. The study concluded that increasing capital base requirements through regulatory power could stimulate greater profitability and efficiency in the Nigerian banking sector.
1. The document discusses modern banking strategies for managing risk and selecting profitable investment portfolios. It addresses questions about optimal portfolio structure in variable interest rate environments, appropriate banking products, and successful risk management.
2. Banks can calculate expected returns on asset groups to inform investment decisions, though some may prefer lower risk assets even with similar expected returns. Duration matching of assets and liabilities can help mitigate interest rate risk.
3. Banks employ tools like gap analysis, repricing schedules, and derivatives to manage their exposure to interest rate movements and ensure accurate understanding of risks from their asset-liability mix. Portfolio structure and risk management techniques are crucial for banks' financial stability and performance.
This document summarizes a study that investigated the determinants of commercial bank lending behavior in Nigeria. The study aimed to test how common factors like deposits, investments, interest rates, reserve requirements, and liquidity ratios affect bank lending. Regression analysis found the model to be significant, with deposits having the greatest impact on lending. The study suggests banks focus on deposit mobilization to enhance lending performance and develop strategic plans.
Macroeconomic factors that affect the quality of lending in albania.Alexander Decker
This document analyzes the relationship between macroeconomic factors and credit quality in the Albanian banking system from 2005 to 2013. It finds that non-performing loan rates increased, influenced by the economic slowdown after 2008 and currency depreciation. Unemployment, lower GDP growth, reduced remittances, and inflation stability negatively impacted borrowers' ability to repay loans. A regression analysis showed credit risk significantly increased when GDP growth declined and interest rates rose. Macroeconomic changes, like deteriorating GDP growth, substantially affected the level of non-performing loans in Albanian banks.
This document provides background information and context for a study examining the determinants of banking crises in Nigeria. It begins with an introduction that discusses the important role of banks in economic growth and development. However, it notes that banking nowadays faces many challenges that can lead to crises.
The document then reviews literature on past banking crises in Nigeria. It discusses factors that previous studies have identified as contributing to crises, such as lack of transparency, capital inadequacy, and non-performing loans. It also outlines the objectives, research questions, and hypotheses that will guide the current study.
Finally, the document provides operational definitions of key terms and concludes Chapter 1 by discussing the significance, scope, and limitations
This document summarizes a study that examined the determinants of commercial bank lending in Ethiopia between 2005-2011. The study tested whether bank size, credit risk, GDP, investment, deposit, interest rate, liquidity ratio, and cash reserve requirements influenced bank lending. It found that bank size, credit risk, GDP, and liquidity ratio had a significant relationship with lending, but deposit, investment, interest rate, and cash reserves did not. The study suggests banks focus on managing credit risk and liquidity to support lending.
This thesis investigates the determinants of lending behavior among commercial banks in Ethiopia. The author conducted a case study of eight commercial banks over the period of 2001 to 2013. Through a panel data regression analysis, the author found that deposit volume and bank size had a positive and significant impact on loans and advances. Liquidity ratio and interest rate had a negative and significant impact. Cash reserve requirements and inflation rate had a positive impact, though the relationship was unexpected. GDP growth did not have a statistically significant impact. The study suggests commercial banks focus on deposit mobilization to enhance lending.
Effect of Deposit Money Bank Failure on Economic Development of Nigeria, 2009...ijtsrd
This document discusses the effect of bank failure on Nigeria's economic development from 2009-2019. It begins by establishing that banks play a vital role in providing capital for investment and improving economic well-being, so their collapse can negatively impact economic development. The study uses data from the Nigeria Deposit Insurance Corporation and Central Bank of Nigeria to examine the relationship between bank failure factors like non-performing loans, capital adequacy ratios, and liquidity ratios on unemployment rates. The results found that bank failure Granger causes unemployment in Nigeria over the period studied. The study recommends that banks maintain adequate capital levels and collateral for loans to avoid failures that could undermine economic development.
CREDIT QUALITY IN INDIAN BANKING :QUANTITATIVE EVALUATIONDinabandhu Bag
This document summarizes a study examining factors that influence credit quality and non-performing loans in Indian banking. The study finds:
1) Both economic factors and bank-specific factors like capital adequacy ratios and credit deposit ratios influence credit quality and non-performing assets.
2) Analyzing data from 2002-2007 for 17 major Indian banks, the study finds higher capital adequacy ratios and credit deposit ratios are associated with lower non-performing loans.
3) Stronger economic growth, as measured by GDP growth, is also associated with lower non-performing loans for banks. The results provide insights into how banks can maintain better credit quality.
The banking sector in Pakistan has undergone significant changes since independence in 1947. It initially suffered from a lack of resources and trained professionals. The State Bank of Pakistan was established in 1948 as the central bank. In the 1970s, all banks were nationalized but their performance deteriorated. Reforms in the early 1990s privatized many banks. Today, Pakistan's banking sector plays a key role in the economy. It includes commercial, specialized, microfinance and Islamic banks. The sector has expanded services and introduced new payment methods in recent years. Reforms have created an efficient, competitive system dominated by private banks rather than state-owned banks.
Determinants of commercial banks profitability panel data evidence from pakistanAlexander Decker
This document summarizes a research study that investigated the determinants of commercial bank profitability in Pakistan from 2004-2010. The researchers used multiple regression analysis on a sample of 5 major commercial banks to determine the relationship between return on assets (the dependent variable) and various internal and external independent variables. The results indicated that internal factors like liquidity, efficiency, asset composition, deposit composition, and external factors like firm size had a significant impact on bank profitability. The study adds to the limited literature on factors influencing bank performance in Pakistan.
This document discusses empirical research on the determinants of bank lending across countries. It proposes estimating equations to model domestic credit levels based on bank balance sheet and capital requirements approaches. The analysis will use data from 146 countries over 1990-2013 to examine how economic growth, banking system health, and external capital flows influence domestic credit after controlling for other factors. Key determinants expected to impact credit include deposits, interest rates, costs, capital levels, and macroeconomic conditions.
This document analyzes the performance and competitive position of state-owned commercial banks in Bangladesh from 2009-2012. It finds that while these banks have achieved stable growth in deposits, loans, and branches, they have struggled to improve key financial metrics like net profit, returns, and reducing non-performing loans. Trend analysis found positive growth in some areas but negative trends or low correlation for other financial indicators. The study aims to evaluate these banks' performance, conduct competitive analysis, and provide recommendations for improvement. Secondary data is used from annual reports and other sources to analyze metrics and compare the four largest state-owned commercial banks in Bangladesh.
Effect of privatization on banking sector performance in pakistanAlexander Decker
This document summarizes a research paper on the effects of privatization on the banking sector performance in Pakistan. The paper finds that privatization had a positive effect on Habib Bank Limited (HBL) performance. After being privatized, HBL showed improved financial ratios compared to before privatization, such as higher return on assets and lower non-performing loans. However, other banks did not see the same benefits of privatization as HBL. The document recommends that other banks follow HBL's policies and strategies to improve their performance after privatization.
Determinants of banks’ profitability in a developing economyAlexander Decker
This document investigates the factors that affect bank profitability in Tanzania. It uses a fixed effects regression model on panel data from 23 banks over the period of 2009 to 2013. The empirical results show that bank-specific factors, which are influenced by bank management decisions, significantly impact bank profitability in Tanzania. However, macroeconomic factors do not seem to significantly affect bank profitability. Therefore, bank profitability in Tanzania is mainly influenced by internal management decisions, while external macroeconomic conditions have an insignificant effect. The study aims to provide insight to policymakers and bank managers on how to improve long-term profitability.
Cuhk advd prog on basel iii sheng (final)Andrew Sheng
Basel III aims to standardize minimum capital and liquidity standards globally, but its implementation in Asia faces several issues and concerns:
1) Tighter standards could potentially slow Asian growth and trap the global economy in a synchronized recession if Asia's access to credit is constrained.
2) Basel's risk-weightings favor advanced banks and are biased against Asian banks, as Asian banks are less sophisticated and rely more on standard models which automatically assign higher capital costs compared to European banks.
3) Credit ratings are also biased against Asian banks and economies, as they have lower sovereign ratings which translate to much higher capital requirements to support the same amount of loans or bonds. National discretion and priorities need to be considered for
best material for ank exam 2014 ibps po best exam tips from gr8dreamz.com website, best material for ank exam 2014 ibps po best exam tips from gr8dreamz.com website, best material for ank exam 2014 ibps po best exam tips from gr8dreamz.com website,
This thesis examines the capital adequacy norms set by Nepal Rastra Bank (NRB) for commercial banks in Nepal and their impact on Bank of Kathmandu Ltd (BOK) and Himalayan Bank Ltd (HBL). The thesis presents data on the capital funds, risk-weighted assets, deposits, and credits of BOK and HBL. It analyzes capital adequacy ratios, capital to deposit ratios, and credit to deposit ratios. Correlation coefficients and hypothesis testing are used to statistically analyze the relationship between capital funds and deposits/credits. The findings suggest the NRB capital adequacy norms have impacted the capital funds of BOK and HBL.
The document discusses capital adequacy norms and concepts related to banking in India. Some key points:
- Capital Adequacy Ratio (CAR) refers to the ratio of a bank's capital to its risk assets and is used to protect depositor and shareholder interests.
- The Basel Committee prescribed international capital adequacy norms. In India, the Narasimham Committee recommended banks maintain a minimum CAR of 8-10%.
- CAR is calculated based on risk-weighted assets, with different asset classes assigned risk factors. Capital is divided into Tier 1 (core) and Tier 2 categories.
- Asset-liability management aims to manage a bank's balance sheet to allow for interest rate
Capital adequacy measures a bank's capital reserves relative to its risk-weighted assets and activities. It aims to ensure banks can absorb reasonable losses without becoming insolvent. The Basel Committee on Banking Supervision, formed in 1974 under the Bank for International Settlements, establishes capital adequacy standards known as the Basel Accords. Basel I covered only credit risk while Basel II and III expanded coverage of risks and strengthened requirements on capital, liquidity and leverage to promote banking sector and financial stability.
The Capital Adequacy Ratio (CAR) is a ratio used by bank regulators to measure a bank's capital in relation to its risk. It is calculated by dividing a bank's capital by its risk-weighted assets. The minimum CAR required by regulators is 8%, with some countries requiring higher ratios. The CAR helps ensure banks can absorb reasonable losses and protects depositors, maintaining confidence in the banking system.
The Capital Market Line (CML) and Security Market Line (SML) are both half-lines that connect the risk-free asset to the market portfolio. The CML is defined in terms of expected return and total risk, while the SML is defined using expected return and systematic risk. Efficient portfolios lie on the CML, offering the highest return for a given level of risk, while all portfolios should lie on the SML according to the Capital Asset Pricing Model equation.
Bank consolidation and bank risk taking behaviourAlexander Decker
This study examines how bank consolidation and increased capital requirements in Nigeria have impacted bank risk-taking behavior. The researchers analyze panel data from Nigerian commercial banks before and after the 2004 banking reforms that increased minimum capital requirements and encouraged mergers. Their results show that higher capital levels promote bank stability but excessive loan loss provisions may indicate deteriorating loan quality. Bank size has a nonlinear effect on stability, and the consolidation period saw abnormal loan growth, suggesting moral hazard issues. The researchers conclude that capital reforms need effective regulation to prevent excessive risk-taking that could undermine stability gains.
An analysis of the impact of mergers and acquisitions on commercial banks per...Alexander Decker
This document analyzes the impact of mergers and acquisitions on commercial banks in Nigeria. It discusses how the Central Bank of Nigeria introduced reforms in 2004 that required banks to increase their minimum capital to 25 billion naira by 2005. This led to over 80% of banks merging into 25 banks, while 14 banks that did not meet the requirement were liquidated. The document examines whether these mergers improved bank performance in terms of profitability, capitalization, and earnings per share. It also discusses the theoretical background and history of bank recapitalization in Nigeria.
This document summarizes a study that empirically investigated the relationship between liquidity and profitability in Nigerian commercial banks. The study used secondary data from 10 years of annual reports of First Bank Nigeria PLC, the oldest and largest bank. Regression analysis found a very high correlation between liquidity and profitability, showing that liquidity is a determining factor in bank profitability. It was recommended that monetary authorities boost bank liquidity to increase loanable funds and profit, and that banks improve liquidity management to prevent insolvency.
The impact of banking reforms on bank performance in nigeriaResearchWap
The main objective of the study is to ascertain the impact of banking reforms on Bank performance in Nigeria. The specific objectives are:
1. To determine the effect (s) of banking reforms on bank performance in Nigeria.
2 To assess the impact of interest rate restructuring on bank’s performance in Nigeria.
3 To determine the impact of Bank Recapitalization /consolidation on bank’s performance in Nigeria.
Econometrics Analysis of Capital Adequacy Ratios and the Impact on Profitabil...iosrjce
IOSR Journal of Economics and Finance (IOSR-JEF) discourages theoretical articles that are limited to axiomatics or that discuss minor variations of familiar models. Similarly, IOSR-JEF has little interest in empirical papers that do not explain the model's theoretical foundations or that exhausts themselves in applying a new or established technique (such as cointegration) to another data set without providing very good reasons why this research is important.
International Journal of Business and Management Invention (IJBMI)inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
This study examined the effect of interest rate deregulation on Nigerian banking system. The study adopted Augmented Dickey – Fuller (ADF), Bound test and Autoregressive Distributed Lag (ARDL). The correlation result indicated that of the correlation matrix that all the explanatory variables (interest rate, lending rate and deposit rate) had effect on loan and advances. The results of the unit root test revealed that interest rate and lending rate were stationary at level 1(0) while loan and advances and deposit rate were stationary at first difference 1(1). Also the results of the bound test revealed that there exist long run equilibrium relationship among the variables. The result of the ARDL indicated that interest rate had significant effect on loan and advances while lending rate and deposit rate had an insignificant effect on loan and advances. It was concluded that banks should monitor the level of loan and advances in respect to major ratios for effective performance. The study thus, recommended that banks should monitor lending rate which should be fixed in order to enhance lending performance. Regulatory authority should ensure that macroeconomic variables such as money supply, liquidity ratio, lending rate, monetary policy rate are effectively managed to enhance bank performance.
International Journal of Business and Management Invention (IJBMI) inventionjournals
International Journal of Business and Management Invention (IJBMI) is an international journal intended for professionals and researchers in all fields of Business and Management. IJBMI publishes research articles and reviews within the whole field Business and Management, new teaching methods, assessment, validation and the impact of new technologies and it will continue to provide information on the latest trends and developments in this ever-expanding subject. The publications of papers are selected through double peer reviewed to ensure originality, relevance, and readability. The articles published in our journal can be accessed online
Assessing the effect of liquidity on profitability of commercial banks in kenyaAlexander Decker
This document discusses factors that affect the profitability of commercial banks in Kenya. It provides background on the banking sector in Kenya and reviews various theories on factors that influence bank profitability. The study aimed to determine the effect of internal factors like liquidity on the profitability of commercial banks in Kenya. It employed a descriptive research design using secondary data from the annual reports of 43 commercial banks over a 5-year period from 2009 to 2013. The findings showed that liquidity had a statistically significant positive relationship with bank profitability. The document provides context on theories of bank profitability and the motivation and methodology of the study.
Given the continued poor performance experienced in the banking sector as indicated by high levels of credit risk, poor quality loans and high incidence of non-performing loans, in spite of the frequent reforms that various governments in Nigeria have embarked upon, there is the need to constantly examine and analyse the factors that could affect bank performance with the aim of providing empirical evidence based on which solutions can be proffered. The paper examined the impact of asset quality management on the performance of deposit money banks in Nigeria. The paper adopted the ECM and co-integration techniques using annual aggregate data sourced from the CBN and the NDIC publications for the period 1990-2013. The findings of the study indicate that the selected measures of asset quality have significant impact on all the three indicators of bank performance namely- return on equity, return on total assets and return on shareholders’ fund respectively. In addition, the results of the impulse response and variance decomposition show that own shocks from the performance indicators ROE, ROTA and ROSF account for a greater proportion of the forecast errors of the variables within the ten-year forecast period. In the light of the above, it is recommended that deposit money banks in Nigeria should intensify their efforts in designing and implementing good asset quality management policies in order to further improve on their performance. This can be through human capacity building for personnel in the form of frequent professional training as well as strict adherence to the prudential guidelines.
Liquidity, capital adequacy and operating efficiency of commercial banks in k...Alexander Decker
This document summarizes a research journal article that examines the effect of liquidity and capital adequacy on the operating efficiency of commercial banks in Kenya. Specifically, it analyzes how bank liquidity ratios and capital adequacy ratios impact operational efficiency. The study found that the previous year's operational efficiency, liquid assets to short-term liabilities ratio, and total capital ratio positively and significantly affect bank operating efficiency. Regression analysis showed that 41.08% of banks' operational efficiency is explained by the study variables. Therefore, banks should focus on improving liquidity ratios and capital ratios to enhance operating efficiency.
Mallam Sanusi Lamido Sanusi presentation on the 2012 policy dialogue by Malla...MMFNG
Towards Financial System Stability: Recent Policy Reforms in the Nigerian Banking Sector - Mallam Sanusi Lamido Sanusi
Aisha Muhammed-Oyebode - CEO, Murtala Muhammed Foundation
This document examines the determinants of commercial bank profitability in Nigeria from 2000-2013 using panel data regression. It finds that asset quality, management efficiency, and economic growth are statistically significant determinants of profitability. Asset quality, in particular, is highly significant, concluding that credit risk is a major determinant of bank profitability. The study aims to assist bank regulators and managers in Nigeria to better understand factors influencing profitability and improve policies. It reviews theories and prior empirical research on determinants of bank profitability, such as capital adequacy, asset composition, regulation, and ownership structure.
Assessment of the impact of universal banking on bank performance in nigeriaAlexander Decker
Universal banking was adopted in Nigeria in 1999 to allow banks to expand their activities and strengthen their ability to stimulate economic growth. This paper assesses the impact of universal banking on bank performance in Nigeria from 2001 to 2010. It employs surveys and regression analysis of 24 banks during this period. The findings show that universal banking enhanced real sector funding, reduced bank failures, and improved bank performance. However, universal banking also faced many challenges after its implementation in Nigeria.
Corporate governance and_performance_ofClement F. E.
This study investigates the relationship between corporate governance and the financial performance of Nigerian deposit money banks following the 2005 bank consolidation in Nigeria. The study uses secondary data from 2005-2008 to test whether longer-serving CEOs, more frequent board meetings, and better risk management are associated with lower non-performing loans, higher returns on assets, and greater market capitalization. Regression analysis shows that overall, corporate governance had a positive impact on bank performance. The findings suggest that regulatory policies aimed at strengthening corporate governance in Nigerian banks could help improve financial performance and reduce distress in the banking sector.
The document provides an overview of Zenith Bank PLC, a leading Nigerian bank. It summarizes Zenith Bank's financial performance over time, including growth in total assets, earnings, and shareholders' funds. It also notes the bank's consistent high ratings for financial strength and asset quality. The summary highlights Zenith Bank's strategy of focusing on superior customer service, developing deep client relationships, expanding operations, and maintaining its position as a leading Nigerian bank.
Effects of new financial products on the performance of selected commercial b...Alexander Decker
This document summarizes a research study that examined the effects of introducing new financial products on key performance indicators of selected commercial banks in Nigeria. The study found that the introduction of new financial products accounted for 65.9% growth in customer deposits, 54.5% growth in gross earnings. However, its impact on bank profits was lower at 35.4%, which did not fully reflect the substantial growth in profits declared by banks. The study concluded that introducing new customer-focused financial products and services is important for improving the performance of commercial banks.
Review on Research paper 'Determinants of Financial Performance of Commercial...Saumya Singh
This study examined the determinants of financial performance of commercial banks in Kenya from 2001-2010. It found that bank-specific factors like capital adequacy, asset quality, and management efficiency significantly impacted performance measures like return on assets and equity. However, liquidity and macroeconomic variables did not have significant effects. Additionally, the study found that ownership structure (domestic vs. foreign banks) did not moderate financial performance. Thus, internal bank management decisions were more important determinants of performance than external macroeconomic conditions.
Similar to Effect of capital adequacy on the profitability of the (20)
Abhay Bhutada, the Managing Director of Poonawalla Fincorp Limited, is an accomplished leader with over 15 years of experience in commercial and retail lending. A Qualified Chartered Accountant, he has been pivotal in leveraging technology to enhance financial services. Starting his career at Bank of India, he later founded TAB Capital Limited and co-founded Poonawalla Finance Private Limited, emphasizing digital lending. Under his leadership, Poonawalla Fincorp achieved a 'AAA' credit rating, integrating acquisitions and emphasizing corporate governance. Actively involved in industry forums and CSR initiatives, Abhay has been recognized with awards like "Young Entrepreneur of India 2017" and "40 under 40 Most Influential Leader for 2020-21." Personally, he values mindfulness, enjoys gardening, yoga, and sees every day as an opportunity for growth and improvement.
New Visa Rules for Tourists and Students in Thailand | Amit Kakkar Easy VisaAmit Kakkar
Discover essential details about Thailand's recent visa policy changes, tailored for tourists and students. Amit Kakkar Easy Visa provides a comprehensive overview of new requirements, application processes, and tips to ensure a smooth transition for all travelers.
University of North Carolina at Charlotte degree offer diploma Transcripttscdzuip
办理美国UNCC毕业证书制作北卡大学夏洛特分校假文凭定制Q微168899991做UNCC留信网教留服认证海牙认证改UNCC成绩单GPA做UNCC假学位证假文凭高仿毕业证GRE代考如何申请北卡罗莱纳大学夏洛特分校University of North Carolina at Charlotte degree offer diploma Transcript
OJP data from firms like Vicinity Jobs have emerged as a complement to traditional sources of labour demand data, such as the Job Vacancy and Wages Survey (JVWS). Ibrahim Abuallail, PhD Candidate, University of Ottawa, presented research relating to bias in OJPs and a proposed approach to effectively adjust OJP data to complement existing official data (such as from the JVWS) and improve the measurement of labour demand.
South Dakota State University degree offer diploma Transcriptynfqplhm
办理美国SDSU毕业证书制作南达科他州立大学假文凭定制Q微168899991做SDSU留信网教留服认证海牙认证改SDSU成绩单GPA做SDSU假学位证假文凭高仿毕业证GRE代考如何申请南达科他州立大学South Dakota State University degree offer diploma Transcript
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Discover the Future of Dogecoin with Our Comprehensive Guidance36 Crypto
Learn in-depth about Dogecoin's trajectory and stay informed with 36crypto's essential and up-to-date information about the crypto space.
Our presentation delves into Dogecoin's potential future, exploring whether it's destined to skyrocket to the moon or face a downward spiral. In addition, it highlights invaluable insights. Don't miss out on this opportunity to enhance your crypto understanding!
https://36crypto.com/the-future-of-dogecoin-how-high-can-this-cryptocurrency-reach/
In a tight labour market, job-seekers gain bargaining power and leverage it into greater job quality—at least, that’s the conventional wisdom.
Michael, LMIC Economist, presented findings that reveal a weakened relationship between labour market tightness and job quality indicators following the pandemic. Labour market tightness coincided with growth in real wages for only a portion of workers: those in low-wage jobs requiring little education. Several factors—including labour market composition, worker and employer behaviour, and labour market practices—have contributed to the absence of worker benefits. These will be investigated further in future work.
Economic Risk Factor Update: June 2024 [SlideShare]Commonwealth
May’s reports showed signs of continued economic growth, said Sam Millette, director, fixed income, in his latest Economic Risk Factor Update.
For more market updates, subscribe to The Independent Market Observer at https://blog.commonwealth.com/independent-market-observer.
Enhancing Asset Quality: Strategies for Financial Institutionsshruti1menon2
Ensuring robust asset quality is not just a mere aspect but a critical cornerstone for the stability and success of financial institutions worldwide. It serves as the bedrock upon which profitability is built and investor confidence is sustained. Therefore, in this presentation, we delve into a comprehensive exploration of strategies that can aid financial institutions in achieving and maintaining superior asset quality.
An accounting information system (AIS) refers to tools and systems designed for the collection and display of accounting information so accountants and executives can make informed decisions.
Independent Study - College of Wooster Research (2023-2024) FDI, Culture, Glo...AntoniaOwensDetwiler
"Does Foreign Direct Investment Negatively Affect Preservation of Culture in the Global South? Case Studies in Thailand and Cambodia."
Do elements of globalization, such as Foreign Direct Investment (FDI), negatively affect the ability of countries in the Global South to preserve their culture? This research aims to answer this question by employing a cross-sectional comparative case study analysis utilizing methods of difference. Thailand and Cambodia are compared as they are in the same region and have a similar culture. The metric of difference between Thailand and Cambodia is their ability to preserve their culture. This ability is operationalized by their respective attitudes towards FDI; Thailand imposes stringent regulations and limitations on FDI while Cambodia does not hesitate to accept most FDI and imposes fewer limitations. The evidence from this study suggests that FDI from globally influential countries with high gross domestic products (GDPs) (e.g. China, U.S.) challenges the ability of countries with lower GDPs (e.g. Cambodia) to protect their culture. Furthermore, the ability, or lack thereof, of the receiving countries to protect their culture is amplified by the existence and implementation of restrictive FDI policies imposed by their governments.
My study abroad in Bali, Indonesia, inspired this research topic as I noticed how globalization is changing the culture of its people. I learned their language and way of life which helped me understand the beauty and importance of cultural preservation. I believe we could all benefit from learning new perspectives as they could help us ideate solutions to contemporary issues and empathize with others.
2. Journal of Money, Investment and Banking - Issue 24 (2012) 62
Every business exerts considerable influence on its environment, customers, the government
and the general public and this is derived from its financial resources and profitability which is a
function of availability of funds to prosecute identified investment.
Bank capital has always been a central and vexing issue in the context of financial health and
safety of a bank. It can in fact be said that the ultimate strength of a bank lies in its capital funds given
its significance as a tool for meeting liabilities in a financial crisis and as a cushion for insulating a
bank from the vagaries of the market adversity. For a bank to enjoy depositors’ confidence, it must
have a strong capital base as evidence of its strength and a tool for operating profitably so that
shareholders’ funds can increase through accretion to statutory and general reserves. Every business
exerts considerable influence on its environment, customers, the government and the general public
and this is derived from its financial resources and profitability which is a function of availability of
funds to prosecute identified investment.
In past years, the world has witnessed ‘the crack’ and in some cases, total collapse of major
financial institutions, which before then, had made and declared significant and sometimes enviable
returns. Following these collapse, there was a need to review the contradiction that played out in some
of these cases, between declaration of significant returns and sudden death. This informs the evaluation
of banks’ performance from a risk adjusted bases. Banks are among the most leveraged businesses with
substantial proportion of their assets in loan and advances exposing them to considerable risk. There is
also an established fact of risk – return relationship whereby the higher the risk taken the higher the
return expected. In essence, banks by the nature of their operations may make substantial profit from
loans and advances but without commensurate level of capital to cushion unanticipated losses may fail.
1.1. Statement of the Problem
Adjustment in bank capital sizes has constituted a significant policy focus of regulatory reforms in the
last sixty years of the Nigerian banking system-operations. The watershed for regulatory adjustment
and re-engineering of Nigerian bank capital and adequacy compliance commenced with the Parton
Commission of Enquiry 1951 which culminated in the enactment of the first Nigerian banking law
(The 1952 Banking Ordinance). This and subsequent regulatory framework, both local and
international including the Central Bank of Nigeria Act 1959; the Banking Decree 1969, the Central
Bank of Nigeria Decree (24) 1991; Banks and other Financial institution Decree (25) 1991; Basle1 and
2 as well as Bank Consolidation policy of 2004 emphasized the need for capital adequacy and upward
adjustment in Nigerian banks statutory capital. For instance; Nigerian bank regulatory authorities
seemed to have incorporated upward adjustments on statutory capital as a major policy focus since
1988 without corresponding linearity between the increases and bank distress management. Table 1.0
below presents relationship between bank capital adjustments and distress management.
Table 1: Recapitalization of the Nigerian Banking System and incidence of Distress 1988-2008
Numbers of Operating Number of Distressed Distressed Banks as % Minimum Regulatory
Years
deposit Banks Deposit Banks Total Deposit Banks Capital
1988 64 7 10.9 N10m.
1990 107 9 8.4 N10m.
1992 120 16 12.6 N50m.
1995 115 58 52.2 N50m.
1997 115 60 61. N500m.
1998 89 12 24.7 N500m.
1999 90 10 11.1 N500m.
2001 90 - - N1b.
2003 87 3 3.7 N2b.
2004 89 4 - N25b.
2005 25 13 14.6 N25b.
2008 24 7 - N25b.
Source: NDIC Annual Report – Various Publications 1988-2008.
3. 63 Journal of Money, Investment and Banking - Issue 24 (2012)
Emphasis on continuous increases in regulatory capital as antidotes for ensuring stability and
solvency within the Nigerian banking system seemed to have overlooked balanced interaction between
personnel management, policy suitability and environmental stability; hence continuous incidence of
bank distress (Soyibo and Odusola (2003) Ayida (2004), Adedipe 2005, and Onaolapo 2007. Capital
adequacy management among its other significances is designed to provide cushion for absorbing
operational losses; afford some measures of shareholders confidence and reveals the bank’s ability to
finance its capital project as well as ensure some level of protection for depositors’ funds; Greuning
and Bratanovic (2003). Based on these justifications, Nigerian bank regulatory authorities most
especially the Central Bank of Nigeria (CBN) have within the last 22years instituted various reforms
that culminated in over 1000% increases in deposit bank statutory capital. In spite of the noticeable
changes in regulatory capital, incidence of distress has remain a permanent phenomenon of the sector
leading to the recent establishment of Asset Management Company of Nigeria (AMCON)and the take
over of the boards of management of seven problem banks within the last three years 2009 – 2011.
Given the spate of capital adequacy measures put in place to stabilize the financial health of the
Nigerian banking sector vis-à-vis the incidence of sectoral distress, this paper examine the following
research questions/objectives:-
(i) Does Capital Adequacy management influence Nigerian deposit bank Returns on Asset
(ROA)?.
(ii) To what extent does compliance with Capital Adequacy conditionality influence
operational efficiency among selected Nigerian deposit banks?
(iii) What impacts does capital adequacy compliance has on bank profitability and Returns on
Capital Employed (ROCE)?.
Establishing the functional role of capital vis-à-vis profitability, level of performance and
public confidence in banks emphasize the need for a capital adequacy as a means for sustaining sound
financial system. Generally both the regulatory authority and bankers to some extent agree on the
significance of some level of capitalization for normal operation. The bone of contention lies on how to
determine what proportion is adequate and the causality between the level of capital and bank
performance.
This study therefore examines issues relating to the specific roles of capital adequacy and its
impact on bank profitability.
2. Literature Review and Theoretical Framework
2.1. Capital and Capital Adequacy
The significance of start-up and operating capital to any business cannot be over emphasized and
according to the submission of many financial theorists, the term capital is capable of being a source of
confusion because of the variety of meanings which can be assigned to it, Ebhodage (1991), Greuning
and Poratanovic (2003), and Satchindananda (2006). To the economist, capital refers to “real” capital
which is the stock of goods accumulated through production while in business and finances, it is seen
as “financial capital” which in itself could sometimes mean both tangible and intangible capital; Klise
(1972). On the other hand, Arogundade (1999) defines capital as the owner’s stake in business and
therefore a commitment to its success. Opinion however, differs among experts in banking and finance
as to what constitutes capital adequacy; for instance Nwankwo (1991) submits that the question of how
much capital a bank needs to ensure the stakeholders confidence and sustain healthy operations is
determined by the supervisory and regulatory authorities.
Umoh (1991) noted that adequate capitalization is an important variable in business and it is
more so in the business of using other people’s monies such as banking. It is further stated that insured
banks must have enough capital to provide a cushion for absorbing possible losses or provide, funds
for its internal needs and for expansion, as well as ensure security for depositors and the depositor
insurance system. Regulators and bankers have also not reached agreement as to what level of
4. Journal of Money, Investment and Banking - Issue 24 (2012) 64
capitalization is adequate; for instance while regulators concern themselves primarily with the safety of
banks, the viability of invested funds, and stability of financial markets, sbankers generally prefer to
operate with less capital, as the smaller its equity base the greater the financial leverage. Rose (1999)
buttressed Koch’s stand by stating that even a bank with a low return on assets can achieve a relatively
high return on equity through heavy use of debt (leverage) and minimal use of owner’s capital.
Kidwell et al (2000), on the issue of capital adequacy observed banks and regulators differ
because they have different objectives. The primary goal of bank management is long term profit
maximization achievable through high leverage while bank regulators are more interested in the risk of
bank failures in general. Hence, bank regulators desire higher capital standards that promote bank
safety.
2.2. Function of Capital
The primary function of capital is to finance the purchase of building, machinery and equipment while
its secondary function is to protect long and short tem creditors who make funds available to the
business. However, in banking, the function of capital is primarily to serve as a cushion on loaned
funds to absorb losses that may occur. It also serves the function for the acquisition of physical assets;
Rosse (1964) , Crosses and Hamsel (1980) and the Economist (1999) .
Bank capital affords the “engine and bumper” that keeps the bank, going as well as absorbing
nasty shocks and the more capital a bank has, the better it is able to sustain losses without running into
insolvency. For instance a bank statutory capital primarily serves as a indicator of bank growth, ensure
funds for the organization’s growth and afford the development of new service, programs and
facilities; and a ‘tether ‘ for regulatory agencies to limit how much risk exposure banks can accept. It
thus protect the government deposit insurance system from serious losses. In spite of the controversy
over the roles of capital between bankers and regulators coupled with the fact that its function will
largely determine the quantity or amount of capital considered adequate for banking business, there
seems to be similarity between the parties’ stands on the various purposes of capital. This has led to the
classification of the roles of capital in banking into primary and secondary; the former function
affording banks operational latitudes while the latter bring about efficiency. Other review of banking
literatures has shown that regulators place high premium on the primary functions while bankers
emphasized secondary roles.
Nwankwo (1991) stated that the indispensability of capital in banking lies on its functional
significance at the various stages in a bank’s life cycle; for instance at the commencement it satisfies
the statutory minimum requirement as well as compensate for lack of profit that is generally the
characteristic of business at the early years of operation. As a bank matures, additional capital would
be needed to cushion expansion and absorb operational losses and where the third stage is
characterized with either illiquidity or bankruptcy many banks survive these hazards through the
application of capital as a tool for protecting depositors and other creditors.
2.3. Components of Bank Capital
Accounting theory defines capital, simultaneously as a net worth which equals the cumulative value of
liability and represents ownership interests in a firm. In banking, the regulators concept of bank capital
differs substantially from accounting capital. Specifically, regulators exercise some level of depth
when measuring capital adequacy and they refer to “capital” as those funds contributed by the banks
owners consisting principally of stock, surplus (reserves) for contingencies and retained earnings. A
balance sheet classification of a bank capital will generally include ordinary share capital or equity,
reserves (statutory reserves, general reserves and retained earnings), and preference shares. Loan
Capital may be referred to as long term capital while reserves may also include share premium and
revaluation reserves; Rose (1999) and Arogundade (1999). Since the universal adoption of the 1988
Basle Accord by many banks; operational capital has been re-defined to consist of core capital
5. 65 Journal of Money, Investment and Banking - Issue 24 (2012)
(primary or tier 1 capital) and supplemental capital (secondary or tier 2 capital). Thus Components of
the two tiers of a bank capital will include Equity capital i.e Common stock + perpetual preferred
stock + Surplus fund + Bonus issue reserve + Minority equity interest in subsidiary companies; while
Core capital refers to Equity Capital – goodwill (other intangible assets). Another class of capital
commonly referred to as Supplemental capital relates to Provision for loan loss + preferential shares
+ Convertible securities (hybrid capital instruments) + Revaluation reserves.
2.4. Capital Adequacy Measurement and Profitability
Crosse and Hamsel (1980) stated that the adequacy of capital is a dynamic concept and it is influenced
by the prevailing and expected economic conditions of the entire economy. Ebhodaghe (1991) defines
capital adequacy as a situation where the adjusted capital is sufficient to absorb all losses and cover
fixed assets of the bank leaving a comfortable surplus for the current operation and future
expansion.Functionally, adequate capital is regarded as the amount of capital that can effectively
discharge the primary function of preventing bank failures by absorbing losses. On the other hand
measurement of capital for adequacy purposes is determined by several factors (both internal and
external) influencing the level of risk occasioned by operation. Furthermore the level of capital
perceived to be adequate at one time may need to be adjusted over time as the risk characteristics the
competitive environment, markets and economic conditions in which the bank operates change. The
Basel Accord (1988) as international standard of capital adequacy recognizes the ratio of capital funds
to deposit and has informed the adoption of a rule of thumb that a bank should have capital funds equal
to at least 10% of its deposit liabilities. The minimum risk-based standard for capital adequacy was set
by Basel Accord, 1 at 8% of risk-weighted assets of which the core capital element should be at least
4%. Oftentimes a bank statutory capital is considered as adequate if it is enough to cover the bank’s
operational expenses, satisfy customers’ withdrawal needs and protect depositors against total or
partial loss of deposits in the event of liquidation or losses sustained by the bank; Onuh (2002) Crosse
and Hamsel (1980)
The nexus between capitalization and profitability is particularly pronounced given the
significance of business profit as a tool for risk mitigation, business survival and a sign of successful
product development.
Figure 2.1: Inter-relationship Between Capitalization and Bank performance Metrics
Profitability
Risk Minimization Capitalization Business Survival
Product Devt.
Source: Authors design
At the centre of every capitalization attempt made by a bank is the need to ensure a balance
between sustainable product developments, profitability and risk mitigation. For instance, a sound
banking system is built on profitability and adequacy of capital.. Profitability is a revealing indicator of
the efficiency of a bank competitiveness in the markets and the quality of its managements. Both the
level of capitalization and profitability are used as indicators of bank risk management efficiency and
the extent of ‘cushion’ available in case the ‘unexpected’ arises. Profitability in form of retained
earnings is typically one of the likely sources of capital generation.
6. Journal of Money, Investment and Banking - Issue 24 (2012) 66
Crosse and Hamsel (1980) stated that capital has to do with the bank’s ability to generate
income. and a means for expanding its operations, deliver quality service and hence remain
competitive. This, no doubt, is critical to income generation as growth of balance sheet is not possible
without adequate capital; Greeuning and Bratanovic (1993) Rosse and Hamsel (1980).
Capital adequacy is also an important indicators of the strength of a bank. The best
management cannot turn around an ailing financial institution if it does not have an adequate capital. In
essence a direct implication of capital adequacy requirement is that it limits the risk profile of
investment of a bank and therefore affects its capacity to achieve a target level of profitability. The
essence capital adequacy lies on the needs to manage or re-structure the balance sheet given the linear
relationship between bank profitability; core capital ratio and the risk-based capital ratio. Increase in
capital ceteris paribus is expected to enhance earnings by reducing the expected cost of financial
distress including bankruptcy; Oluyemi (1996) Nanon (1999) and Mathura (2009). Alexandre and
Fabiano (2004) also emphasised on the importance of inflation in the analysis of profitability and
capital adequacy. It was noted that the validity of any analysis of profitability and capital adequacy lies
on the significance of profitability as an appropriate measure of income and the essence of capital size
as an indicators of monetary concept of capital maintenance in terms of general purchasing power be
based on restated historical cost.
3. Research Methodology
The study employed secondary data that were obtained from publications of the Central Bank of
Nigeria, (CBN), the National Bureau of Statistics, (NBS), The Nigerian Deposit Insurance Corporation
and other relevant publications. Information used cover a period of ten years. The OLS estimation is
obtained from SPSS 17.0 adopted for the purpose of the analysis. The stationary of the time series is
tested using the Augmented Dickey Fuller (ADF) Unit Root Test (as obtained from EViews7) for the
variables adopted in the study. In addition, the Pair wise Granger Causality Test (GCT), is further used
for co-integration test between the variables. The hypothesis for study states that Capital Adequacy
does not affect the profitability of any of the sampled Nigerian deposit money bank.
Models 1 –7 presented below are used to relate the study variables:
CAR = β 0 + β 1 RA + µ 1 (1)
CAR = β 0 + β 1 EFR + µ 2 (2)
CAR = βo + β1PBT + µ3 (3)
CAR = β0 + β1 ROCE + µ4 (4)
CAR = ΒO + Β1INFR + µ5 (5)
CAR = β0 + β1RA + β2ROCE + µ6 (6)
CAR = β 0 + β 1 RA + β 2 EFR + β3PBT + β4ROCE + β5INFR + µ7 (7)
Where βo --- βn are coefficients of the expletory variables N; the error terms and
CAR = Capital Adequacy Ratio
RA = Return on Assets
EFR = Efficiency Ratio
PBT = Percentage Growth of Profit before Tax
ROCE = Return on Capital Employed
INFR = Inflation Rate
7. 67 Journal of Money, Investment and Banking - Issue 24 (2012)
3.1. Analysis of Data and Presentation of Result
Table 1: Capital Adequacy and banks Returns on Assets. (ROA)
Dependent variable: CAR
Unstandardized Coefficient
Variable Standardized Coefficient t – Statistic
B Std. Error
Constant 19.725 8.847 2.230
RA -0.035 -0.274 2.801 -0.098
R- squared 0.001
Adjusted R- squared -0.124
D-W statistic 2.403
F – ratio 0.010
Source: SPSS Output Generated based on data analysed
From table 1 above, the marginal contribution of the independent variable – Return on Assets
of banks to the dependent variable Capital Adequacy Ratio is negative and the degree of fitness is just
too insignificant from the above result. However, the standard error of the independent variable is low
thereby producing a very low statistical noise in the estimates. The DW is above 2 and this signifies the
presence of a negative serial correlation between the dependent and independent variables.
The result for Model 2 is not far away from that of Model 1. The R2 is insignificant and the
coefficient of EFR is ridiculously low. The standard error is less than 0.2. It shows therefore that
Efficiency Ratio unilaterally may not create any alarm on the Capital Adequacy Ratio of Banks.
Table 2: General Adequacy and Bank Operational Efficiency
Dependent variable: CAR
Unstandardized Coefficient
Variable Standardized Coefficient t – Statistic
B Std. Error
Constant 17.761 10.767 1.650
EFR 0.039 0.019 0.173 0.109
R- squared (R2) 0.001
Adjusted R squared -0.123
D-W statistic 2.437
F – ratio 0.12
Source: SPSS Output Generated based on data analysed
Table 3: Capital Adequacy Ratio and Bank Profitability
Dependent variable: CAR
Unstandardized Coefficient
Variable Standardized Coefficient t – Statistic
B Std. Error
Constant 17.760 2.771 6.409
PBT 0.336 0.028 0.028 1.010
R- squared(R2) 0.113
Adjusted R squared 0.002
D-W statistic 2.575
F – ratio 1.020
Source: SPSS Output Generated based on data analysed
From table 3 above, there is a positive relationship between Capital Adequacy Ratio and
Percentage growth of Profit before Tax (PBT). Just like the two results above, the degree of fitness is
very poor. By virtue of this result, variations in PBT will result in an infinitesimal change on CAR. The
DW result for the relationship shows a negative serial correlation. The standard error is also low and
this depicts a poor statistical reliability of the coefficient estimates.
8. Journal of Money, Investment and Banking - Issue 24 (2012) 68
The result for Model 4 (Table 4) below is worst than the three above. The R2 is zero and a poor
negative relationship. The Standard Error is also very low and the DW is a situation of negative serial
correlation.
Table 4: Capital Adequacy Ratio and Bank Returns on Capital Employed
Dependent variable: CAR
Unstandardized Coefficient
Variable Standardized Coefficient t – Statistic
B Std. Error
Constant 19.095 6.470 2.951
ROCE -0.012 -0.007 0.212 -0.033
R- squared 0.000
Adjusted R- squared -0.125
D-W statistic 2.426
F – ratio 0.001
Source: SPSS Output Generated based on data analysed
Table 5: inflationary effect on Bank Capital Adequacy Ratio
Dependent variable: CAR
Unstandardized Coefficient
Variable Standardized Coefficient t – Statistic
B Std. Error
Constant 25.013 7.041 3.552
INFR -0.313 -0.520 0.558 -0.931
R- squared 0.098
Adjusted R- squared -0.015
D-W statistic 2.435
F – ratio 0.867
Source: SPSS Output Generated based on data analysed
Models 5 (Table 5) and 6 (Table 6) results are not far away from those of Models 1 to 4. The
independent variables show a very minute fraction of variance in the dependent variable. Standard
Errors are just too low and the DW results give a negative serial correlation.
Table 6: Bank Capital Adequacy and Returns on Investment.
Dependent variable: CAR
Unstandardized Coefficient
Variable Standardized Coefficient t – Statistic
B Std. Error
Constant 19.725 9.456 2.086
RA -0.051 -0.407 4.177 -0.098
ROCE 0.024 0.015 0.316 0.046
R- squared 0.001
Adjusted R- squared -0.284
D-W statistic 2.396
F – ratio 0.005
Source: SPSS Output Generated based on data analysed
The result of Model 7 below (Table 7) gives R2 of 27.1%, indicating that 27.1% variation in the
dependent variable will be explained by the independent variables. However, the Adjusted R-squared
is -0.64 and this is because all variables in the independent variables had earlier shown poor fittings in
the previous models. By implication, 64% variation in the dependent variable will be negatively
explained by all the independent variables. The D-W statistic is 2.48 (which lie between 2 and 4) and
this indicates a degree of negative autocorrelation. The marginal contributions of the various
independent variables to the dependent variable (assuming all other variables are constant) are strong
9. 69 Journal of Money, Investment and Banking - Issue 24 (2012)
except for INFR which is 0.164. RA has -0.997, a negative but strong relationship. EFR is also good
with -0.52. However, PBT and ROCE have 0.949 and 0.968 respectively. These show strong positive
relationships with the dependent variable. The value of the F-ratio (0.297) is low and this is not close to
1. A resultant effect of this is to accept the null hypothesis. The values of t-statistic calculated are lower
than the tabulated value t-statistic at 95% significant level which also signifies the acceptance of the
null hypothesis.
Table 7: Bank Capital Adequacy, Profitability and Inflation
Dependent variable: CAR
Unstandardized Coefficient
Variable Standardized Coefficient t – Statistic
B Std. Error
Constant 35.507 26.392 1.345
RA -0.997 -7.903 9.464 -0.835
EFR -0.520 -0.256 0.334 -0.766
PBT 0.949 0.079 0.089 0.887
ROCE 0.968 0.580 0.666 0.872
INFR 0.164 0.272 1.405 0.194
R- squared 0.271
Adjusted R-squared -0.640
D-W statistic 2.481
F – ratio 0.297
Source: SPSS Output Generated based on data analysed
Table 8 below gives the ADF Statistic values (tα) and associated one-sided probabilities (ρ–
values). It also reports the critical values of the 5% level. Following the rule, we do not reject the null
hypothesis if tα value is greater than the critical values. Also, a ρ–value that is lower than the 5% (0.05)
significant level is taken as evidence to reject the null hypothesis of a zero coefficient. The ADF
Statistic values for all the regressors are greater than their corresponding 5% critical values at the level
and the first difference, hence the need to accept the null hypothesis that is Capital Adequacy will not
affect the profitability of any bank.
Under the assumption that the errors are normally distributed or that the estimated coefficients
are asymptotically normally distributed, the ρ–values of the t-statistic need to be examined in drawing
our conclusion. The ρ–values for all the independent variables and first difference are greater than 0.05
thus, signifying evidence to accept the null hypothesis.
Table 8: Augmented Dickey Fuller (ADF) Test Statistics
LEVEL FIRST DIFFERENCE SECOND DIFFERENCE
5% 5% 5%
VARIABLES t- t- t-
Prob* Critical Prob* Critical Prob* Critical
Statistic Statistic Statistic
Level Level Level
CAR -4.89 0.026 -4.25 -4.50 0.048 -4.45 -15.46 0.0002 -4.77
RA -2.95 0.211 -4.25 -2.56 0.305 -4.25 -7.79 0.0067 -4.77
EFR -3.41 0.116 -4.11 -3.66 0.111 -4.45 -4.54 0.0621 -4.77
PBT -2.79 0.238 -4.11 -3.92 0.083 -4.45 -2.36 0.3667 -4.77
ROCE -3.08 0.178 -4.25 -2.40 0.355 -4.25 -6.73 0.0122 -4.77
INFR -2.39 0.363 -4.11 -2.71 0.269 -4.45 -4.67 0.0414 -4.45
Prob* - Mackinnon (1996) one–sided p-values
Source: SPSS Output Generated based on data analysed
The ADF Unit Root test result in table 9 below is used to test the stationary of the time series.
All the variables are non-stationary at level for the intercept. At the first difference, all except RA are
non-stationary at the intercept. These imply that the variance in CAR increases with time and
approaches infinity but with trend at level, RA and INFR are stationary. However, INFR became non-
10. Journal of Money, Investment and Banking - Issue 24 (2012) 70
stationary at the second difference with trend, but RA was stationary at first difference and second
difference with trend. From the result of the Unit Root test, it shows that all the independent variables
are non-stationary at one point or the other (either at the Level, First Difference or Second Difference).
This shows that the variance of all these variables increases with time and approaches infinity.
COEFFICIENT AT
COEFFICIENT AT COEFFICIENT AT
SECOND
LEVEL FIRST DIFFERENCE ORDER OF
VARIABLES DIFFERENCE
INTEGRATION
INTERCE INTERCE INTERCE
TREND TREND TREND
PT PT PT
CAR 12.42 1.28 -7.19 1.271 15.315 -2.001 I(1)
RA 6.28 -0.21 -0.082 0.049 -5.147 0.811 I(1)
EFR 99.16 -2..69 -38.178 5.133 35.465 -4.769 I(1)
PBT -45.34 18.89 -281.33 57.45 7.61 9.101 I(1)
ROCE 79.28 -6.64 -4.135 0.391 -42.823 6.688 I(1)
INFR 12.96 -0.46 9.96 -1.839 -14.72 2.276 I(1)
Source: SPSS Output Generated based on data analysed
Table 10: GRANGER TEST 2LAG
Pairwise Granger Causality Tests
Date: 07/22/11
Sample: 1999-2008
Lagos: 2
Null Hypothesis: Obs F-Statisc Prob.
RA does not Granger Cause CAR 8 1.07708 0.4441
`CAR does not Granger Cause RA 1.69369 0.3219
EFR does not Granger Cause CAR 8 0.03821 0.9630
CAR does not Granger Cause EFR 4.58528 0.1224
PBT does not Granger Cause CAR 8 0.79057 0.5299
CAR does not Granger Cause PBT 8 0.23745 0.8022
ROCE does not Granger Cause CAR 8 2.52058 0.2279
CAR does not Granger Cause ROCE 8 11.8678 0.0376
INFR does not Granger Cause CAR 8 0.65328 0.5814
CAR does not Granger Cause INFR
The results of the Granger causality test show the statistics for the joint significance of each of
the lagged endogenous variables in the models above. The probability (ρ–values) of the F-statistic for
the joint significance between CAR and AR; CAR and EFR; CAR and PBT; CAR and INFR; and,
CAR and ROCE are greater than the significance level of 0.05, therefore we accept the null hypothesis.
The results of most of the F-statistic are very high and by virtue of this, most of the endogenous
variables can be treated as exogenous variables.
5. Conclusion and Recommendation
The results of the various tests carried out under this study accept the Null
Hypothesis which states that - Capital Adequacy will not affect the profitability of any bank. It
implies that the various efforts by the monetary authority to review often times the capital base of the
banking sector is not borne out of the aim to improve the profitability of the banks but mainly to
maintain stability in the banking industry. This will be noticed from the various actions of the Central
Bank of Nigeria (CBN) in the recent time which come heavily on ailing banks in terms of restructuring
managements, outright revocation of licences and nationalization of some of the banks. Also to be
observed from these actions was the quest to protect depositors and not investors or owners of these
banks. It should be noted from some of the reviewed literatures that strong capital base strengthened
11. 71 Journal of Money, Investment and Banking - Issue 24 (2012)
the ability of banks to sail through the storm of the challenges in the course of their trading activities
and also to withstand the competitive environment. The statutory capital requirement may not have
anything to do with bank performance most especially if the ‘adequate capital’ is not properly
managed. This does not mean however that strong capital base or weak capital base will not have
anything to do with the performance of banks, but rather the influence is likely to be subjected to so
many factors among which are operational management, adequate corporate governance, economic and
political environment, global financial situation, quality of staff and the likes.
The incidence of non-significance between capital Adequacy Ration (CAR), and selected bank
profitability and performance informed recommendations that Nigeria financial regulators need to
focus attention on intrinsic elements of bank operational activates in particular regulatory framework
that review personal and asset management qualities, corporate governance and strategic focus of
Nigeria commercial banks will go a long way in ensuring stable financial environment for deposit
money banks and kindred financial institutions within the system.
References
[1] Adebayo, E. O (2010): “Capital Adequacy: Instrument for Sustainable Growth and
Development in the Nigerian Banking Sector”; Journal of Management Skills and Techniques,
Vol. 1, No. 1, November, Pp 35 - 48
[2] Adedipe A (2005) Building and Sustaining Corporate performance and Growth in the Nigerian
Capital Market Nigerian Stock Market Annual (2005)
[3] Adekanye, F. (1983): Element of Banking, F and A Publisher, Lagos, 3rd Edition
[4] Ajayi, S. I and Ojo, O. O (1981): Money and Banking: Analysis and Policy in Nigerian
Context; George Allen and Urwin Publishers Ltd., London
[5] Alexandre, A. N and Fabiano, G. (2004): “The End of Monetary Restatement and its Impact on
Profitability and in the Capital Adequacy of Banks in Brazil”; www.institutoassaf.com.br
[6] Apilado, V. and Gies T. (1976): Capital Adequacy and Commercial Bank Failure in Bank
Capital; Published by Van Nostrand Reinhold Company, New York
[7] Arogundade, A.O (1999): “Capital Adequacy and Capacity Issues”; Focus on Nigeria, July-
Dec
[8] Ayida A. A. (2004) Corporate Governance in Nigerian Banks journal of Nigerian Institute of
Management (chartered) Vol. 40 No 2,3, & 8 April 2004.
[9] Bank for International Settlements (1988): “The Basel Agreement”; June
[10] Basel Committee on Banking Supervision (2005): The Application of Basel II to Trading
Activities and the Treatment of Double Default Effects; Bank for International Settlements
Press & Communications, Switzerland, July
[11] Central Bank of Nigeria (1998 - 2009): Banking Supervision Annual Reports
[12] Central Bank of Nigeria (2005 - 2009): Annual Report and Statement of Account
[13] Crosse, H.D and Hamsel, G.H (1980): Management Policies for Commercial Banks; Bankers
Publishing Company, Boston
[14] Greuning, H.V and Bratanovic S. (1999): Analysing Banking Risk; Maxwell Publishing House
[15] Jerry L. J (1995): Regulation and the Future of Banking; Economic Commentary, Federal
Reserve Bank of Cleveland, August
[16] Kidwell, D. S et al (2000): Financial Institutions, Markets and Money; The Dryden Press,
Harcourt College Publishers
[17] Klise, E. S (1972): Money and Banking; South Western Publishing Co. Cincinnati, Ohio, Fifth
Edition
[18] Manuake, T. (2006): “The New Face of Banking”; TELL Magazine, Lagos, January 2
12. Journal of Money, Investment and Banking - Issue 24 (2012) 72
[19] Mathuva, D. M (2009): “Capital Adequacy, Cost - Income Ratio and the Performance of
Commercial Banks: The Kenyan Scenario” The International Journal of Applied Economics
and Finance, 3(2): 35 - 47
[20] Nanon, S. (1999): “Capital Adequacy and Capital Issues in Nigeria”; CBN Journal of Finance,
Vol.3 No.2
[21] Nwankwo, G.O (1991): Bank Management, Principles and Practice; Malthouse Press Ltd,
Lagos
[22] Ogunleye, R.W (1995): “Monetary Policy Influence on Banks’ Profitability –Evidence from
Single Equation Approach”; NDIC Quarterly, Vol.5 No.4 December
[23] Oluyemi, S.A (1996): “The Implications for Banks’ Profitability on Implementing the Risk-
Based Capital Requirements”; NDIC Quarterly, Vol. 6 Nos.1 & 2, March/June
[24] Onaolapo A. R. (2007) An Evaluation of the Effects of Recapitalization on the Financial Health
of Nigerian Commercial Bank. A op. Cit Ph.D Thesis submitted to the school of Post Graduate
Studies Ladoke Akintola University of Technology (LAUTECH) OGBOMOS for the Award of
PhiL Degree in the Dept. Mgs. 2007
[25] Onyiwa, B. C (2002): “Capital Adequacy in Banks”; The Nigerian Accountant, April/June
[26] Onoh, J.K (2002): Dynamics of Money, Banking and Finance in Nigeria – An Emerging
Market; Astra Meridian Publishers, Lagos
[27] Rose, P. S (1999): Commercial Bank Management; Irwin McGraw-Hill, 4th Edition
[28]
Soyibo A. and Odusola A. F. (2003) Financial Sector Soundness: Conceptual Issues
Conference Procedures; Enhancing Financial Sector Soundness in Nigeria Central Bank of
Nigeria Second Monetary Policy Conference Abuja.
[29] Smikey, J.F. (1999): Bank Financial Management; Oxford Press Ltd.
[30] Wolkwowith, B. (1976): Measuring Bank Soundness in Bank Capital; Van Nostrand Reinhold
Company, New York