International Journal of Management and Applied Science (IJMAS)
.
current issues
Volume-5,Issue-8  ( Aug, 2019 )
Past issues
  1. Volume-5,Issue-8  ( Aug, 2019 )
  2. Volume-5,Issue-7  ( Jul, 2019 )
  3. Volume-5,Issue-6  ( Jun, 2019 )
  4. Volume-5,Issue-5  ( May, 2019 )
  5. Volume-5,Issue-4  ( Apr, 2019 )
  6. Volume-5,Issue-3  ( Mar, 2019 )
  7. Volume-5,Issue-2  ( Feb, 2019 )
  8. Volume-5,Issue-1  ( Jan, 2019 )
  9. Volume-4,Issue-12  ( Dec, 2018 )
  10. Volume-4,Issue-11  ( Nov, 2018 )

Statistics report
Oct. 2019
Submitted Papers : 80
Accepted Papers : 10
Rejected Papers : 70
Acc. Perc : 12%
Issue Published : 66
Paper Published : 4089
No. of Authors : 8401
  Journal Paper




Paper Title :
The Impact Of Recapialization On The Performance Of Banking Sector In Nigeria

Author :Ogunbunmi Solomon Tunde

Article Citation :Ogunbunmi Solomon Tunde , (2015 ) " The Impact Of Recapialization On The Performance Of Banking Sector In Nigeria " , International Journal of Management and Applied Science (IJMAS) , pp. 57-63, Volume-1,Issue-8

Abstract : This study examines how the banking reforms had affected the performance of Nigerian banks using six selected banks which area combination of old and new generation banks; these are Access bank, First bank, GTB, UBA, Union Bank and WEMA bank. The regression model is specified to examine whether the effects of variables such as bank size, asset management and operational efficiency have changed after the recapitalization exercise. The regression is estimated for the entire period of analysis as well as for each of the two sub-periods, namely; 2000-2004 and 2006-2010. The analysis of results revealed that return on asset is negatively affected by consolidation exercise as concerned total asset, asset management and operational efficiency; interest income is significantly related with total asset and operational efficiency; both total assets (bank size) and asset management had a significant and positive effect on interest income of the pre capitalization period and this is similar to the result of the entire period; the net interest margin fell from 7.25% in the precapitalisation era to 4.14% in the post capitalization era; yield on earning asset fell from 2.4% in the pre-capitalisation era to -0.47% in the post capitalization era; cost of capital increased from 6.1% in the pre-capitalisation era to 6.63% in the post capitalization era. Also, return on equity fell from 291.47% in the pre-capitalisation era to 66.2% in the post capitalization era; return on asset fell from 1.98% in the pre-capitalisation era to -0.27% in the post capitalization era; and the effect of asset on interest income increased from 99.07% in the pre capitalization era to 102.65% in the post capitalization era. Equally, the effect of asset management increased from 3.7% in the pre capitalization period to 5.5% in the post capitalization period. Conclusion was made that interest rate is more sensitive total asset, asset management and operational efficiency than return on asset; recapitalization in the Nigerian banking sector has reduced the net interest margin, yield on earning asset, return on equity, and return on asset; cost of capital increased has increased as a result of the 2005 recapitalization process. Banks have not been able to manage their sudden increase in assets well after the post consolidation exercise. Consolidation exercise had positive impact on interest income and negative impact on returns on assets. The study recommends that the CBN should carry out an investigation that can reflect the reasons while return on assets of the banks are not sensitive to the post consolidation changes in total assets, asset management and operational efficiency of the banks. Effort should be made to sustain the increase in net interest margin, yield on earning asset, return on equity, and return on asset associated with consolidation and merger process. The increase in cost of capital is a major weakness of the consolidation exercise and CBN should make effort to discover the reasons while resulting mergers and higher capitalization fails to reduce cost of capital.

Type : Research paper


Copyright: © Institute of Research and Journals

| PDF |
Viewed - 35
| Published on 2015-09-09
   
   
IRAJ Other Journals
IJMAS updates
IJMAS -THANK YOU ALL FOR CONTRIBUTING YOUR PAPER TO IJMAS JULY ISSUE.ALL AUTHORS ARE REQUESTED TO GET THEIR HARD COPY NOW.
The Conference World
Facebook

JOURNAL SUPPORTED BY