Bank Recapitalization and Economic Prosperity: A Case of Nigeria Banking Industry

Abstract

The recapitalization of Nigerian banks arose out of the needs of the society, dynamic nature of the economy and sensitive nature of the banking industry. This study was designed to examine bank recapitalization so as to see whether the recapitalization has led to economic prosperity in Nigeria. Secondary data were obtained from the Central Bank of Nigeria Statistical Bulletin during the period 1992-2013 and Ordinary Least Square estimation technique was used in conducting the statistical tests. Using some bank indices (bank total assets and credits) and economic prosperity measure (Gross Domestic Product), the study suggests that bank recapitalization has significantly affected the bank performance and this in turn has led to economic prosperity.  The study recommended that there should be some degree of surveillance on the banking industry by the monetary authorities so as to protect the industry from taking advantage of their status to embark on unwholesome act.  In addition, urgent action needs to be taken by the recapitalized banks to make efficient use of their assets and the banking industry should lend more to the real sector of the economy such as agriculture, manufacturing sector so that the economy can witness and harness aggregate growth.

Keywords:  Bank Recapitalization, Economic Growth, Total Assets, Total Credits