Impact of Bank Reform on Capital Adequacy and Profitability of Nigerian Banks

International Journal of Economics and Management Studies

© 2015 by SSRG - IJEMS Journal

Volume 2 Issue 5

Year of Publication : 2015

Authors : Ijeoma, Ngozi Blessing

10.14445/23939125/IJEMS-V2I3P103

How to Cite?

Ijeoma, Ngozi Blessing, "Impact of Bank Reform on Capital Adequacy and Profitability of Nigerian Banks," SSRG International Journal of Economics and Management Studies, vol. 2,  no. 5, pp. ):20-36, 2015. Crossref, https://doi.org/10.14445/23939125/IJEMS-V2I3P103

Abstract:

The study assessed the impact of bank reform on capital adequacy and profitability of banks using Zenith bank PLC as a case. The main objective of this study was to review the impact of Bank reforms on the economic survival of Nigerian banks. The data used in this study was secondary data obtained from the annual reports and accounts of the bank. The statistical tools employed include the correlation analysis, the paired sample t-test analysis and descriptive analysis. Findings from the analysis revealed that the reform programme has brought about certain implications on the Nigerian banking sector which include brand and structural implication. A similar behavior in terms of the capital adequacy in both pre and post recapitalization era, though they expressed different capitalization. The ratios obtained showed inadequate capitalization of the bank and the need for recapitalization as a parameter to ensure capital adequacy of the bank. It was found that there exists a very high degree of variability between the pre and post recapitalization era in terms of the calculated ratios. Also, result showed that there exist about 72.7% relationship on share capital obtained for before reform and after reform which implies strong positive relationship. The result further revealed that bank reform has significant impact on share capital of Zenith bank Plc for before reform and after reform. In addition, it was observed that there exist about 64.2% relationship on profit after tax obtained for before reform and after reform which implies positive relationship. Findings showed that bank reform has significant influence on profit of Zenith bank Plc for before reform and after reform; hence, bank reform was able to boast profitability of Zenith bank Plc.

Keywords:

Capitalization, Survival, Profitability, Pre recapitalization, Post recapitalization, Reform

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