This study investigates the impact of shareholders’ fund on bank performance in the Nigerian deposit money banks (formerly known as commercial banks- 1986-2006). The study captured their performance indicators and employed cross sectional and time series of bank data obtained from Central Bank of Nigeria (CBN).The formulated models were estimated using ordinary least square regression method. The study identified a positive relationship between shareholders fund and bank loan. We also find that there is significant relationship between shareholders’ fund and banks’ liquidity, bank deposits, and bank loans. The efficiency of management measured by operating expenses is negatively related to return on capital. The implication of this study, among others, is that adequate shareholders fund can serve as a veritable stimulant in strengthening the performance of Nigeria deposit money banks and also heighten the confidence of customers especially in this era of global economic melt-down that has taken its toll in the Nigerian financial system.

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The Impact Of Bank Capitalization In The Performance Of Ngerian Banking Industry (1986-2006)

Ikpefan Ochei Ailemen*
Department of Banking & Finance, Covenant University, Ota, Ogun State.
Periodicity:December - February'2012
DOI : https://doi.org/10.26634/jmgt.6.3.1722

Abstract

This study investigates the impact of shareholders’ fund on bank performance in the Nigerian deposit money banks (formerly known as commercial banks- 1986-2006). The study captured their performance indicators and employed cross sectional and time series of bank data obtained from Central Bank of Nigeria (CBN).The formulated models were estimated using ordinary least square regression method. The study identified a positive relationship between shareholders fund and bank loan. We also find that there is significant relationship between shareholders’ fund and banks’ liquidity, bank deposits, and bank loans. The efficiency of management measured by operating expenses is negatively related to return on capital. The implication of this study, among others, is that adequate shareholders fund can serve as a veritable stimulant in strengthening the performance of Nigeria deposit money banks and also heighten the confidence of customers especially in this era of global economic melt-down that has taken its toll in the Nigerian financial system.

Keywords

Buffer Capital theory of capital adequacy, Deposit insurance theory, Expense theory, Central Bank of Nigeria.

How to Cite this Article?

Ikpefan Ochei Ailemen (2012). The Impact Of Bank Capitalization In The Performance Of Nigerian Banking Industry (1986 2006). i-manager’s Journal on Management, 6(3), 31-45. https://doi.org/10.26634/jmgt.6.3.1722

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