Bank Recapitalisation and Its Effect in the Nigeria Banking Industry

CHAPTER ONE 1.0 INTRODUCTION Banking reforms have been an on going phenomenon almost the world right from the 1980s, but it is more intensified in recent time because of the impact of globalisation which is precipitated by sustained integration of the world market and economies. Banking reforms involve several elements that atomic number 18 unique to each country based on historical, economic and institutional imperatives. In Nigeria, the reforms in the banking sector preceded against the backdrop of banking crisis callable to highschoolly undercapitalization deposit taking banks; weakness in the regulatory and supervisory framework; weak management practices; and the tolerance of deficiencies in the corporate governance behaviour of banks (Uchendu, 2005). Banking sector reforms and recapitalization have resulted from mensural policy response to correct perceived or impending banking sector crises and subsequent failures. A banking crisis can be triggered by weakness in banking system characterized by persistent il liquid state, insolvency, undercapitalization, high level of non-performing loans and weak corporate governance, among former(a)s.

Similarly, highly open economies the like Nigeria, with weak financial infrastructure, can be vulnerable to banking crises emanating from other countries through infectivity. Banking crisis usually starts with inability of the bank to meet its financial obligations to its stakeholders. This, in most cases, precipitates runs on banks, the banks and their customers engage in commodious credit recalls and withdrawals which sometimes necessitate Central Bank liquidity support to the affected banks. Some terminal intervention mechanisms whitethorn occur in the form of consolidation (mergers and acquisitions), recapitalization, use of tide over banks, establishment of asset management companies to assume control and convalescence of bank assets, and outright liquidation of non redeemable banks. Bank consolidation, which is at the core of... If you want to get a full essay, aim it on our website: Ordercustompaper.com

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