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IMPACT OF RECAPITALISATION ON THE FINANCIAL PERFORMANCE OF DEPOSITS MONEY BANKS IN NIGERIA
ABSTRACT
Banks with long term financial setbacks in terms of deposits, liquidity, loans and advances and operational loss must continuously seek solution for improvement. Nigeria has long but identified banking problems that are traced to gross inadequate capital base which has been hindering satisfactory performance in the sector. To overcome these problems of under capitalisation of deposits money banks (DMBs) in Nigeria, the Central Bank of Nigeria (CBN) directed the DMBs to recapitalise to the minimum amount of N25 billion (as capital base) through merger, acquisition or restructure with 31st December, 2005 as deadline. It is assumed that the increased capital will go along way to turnaround the banks and provide for satisfactory performance. This study, therefore, evaluates whether or not the recapitalisation has significantly improved the financial performance of DMBs from what it was prior to the exercise. Relevant literatures were reviewed. Based on the nature of the study, correlational research design was adopted while secondary data were mainly employed. Independent t-test for difference of two means was used for data analysis. Pearson product correlation coefficient (PPCC) was also used to determine the extent of the relationship between the two variables. For the test of contribution of shareholders’ funds to each of the performance indicators, path analysis model was used. It was found that there is a significant impact of recapitalisation on the four performance indicators after the exercise. PPCC revealed a strong and positive relationship both before and after the recapitalisation but, the cases of before are higher than those after the exercise. It was also revealed that the deposits highly benefited from the recapitalisation when compared with other performance indicators.
The study recommends that CBN should ensure that the banks’ maintain continuous positive performance and also put in place effective, operational and transparent mechanism with which results can always be measured and that the CBN and other stakeholders should focus on policies that will directly affect all the banks’ financial
performance indicators. Finally emphasis should also be placed on factors such as investment and maintenance of human asset and efficient corporate governance.
TABLE OF CONTENT
Title page- – – – – – – – – i
Approval page – – – – – – – -ii
Dedication – – – – – – – – -iii
Acknowledgement – – – – – – – -iv
Abstract – – – – – – – – – -v
Table of content – – – – – – – -vi
CHAPTER ONE
INTRODUCTION – – – – – – – -1
1.0 Background of the study – – – – -1
1.1 Statement of the problem – – – – -5
1.2 Purpose of the study – – – – – -6
1.3 Significance of the study – – – – -8
1.4 Research questions – – – – – -9
1.5 Scope of the study – – – – – – -10
CHAPTER TWO
LITERATURE REVIEW – – – – – – -11
CHAPTER THREE
Research methodology – – – – – – -39
Design of study – – – – – – – -40
CHAPTER FOUR
Presentation, analysis and interpretation of data – -48
CHAPTER FIVE
Summary of findings – – – – – – -60
Conclusion – – – – – – – – -61
Recommendations – – – – – – – -62
Suggestions for further research – – – – -64
References – – – – – – – – -65
Appendix I – – – – — – – – -68
Questionnaire. – – – – – – – -69
IMPACT OF RECAPITALISATION ON THE FINANCIAL PERFORMANCE OF DEPOSITS MONEY BANKS IN NIGERIA
