The Effect of Recapitalization on Bank Performance in Nigeria

Abstract

This study evaluates the effect of mergers and acquisitions on bank recapitalization inNigeriawith emphasis on the impact of the strategy on economy development. The study makes use of data from the foremost eight banks inNigeriathat account for over 60% of the banking transaction in the country.

The research work was evaluated through regression analysis of secondary data covering ten years (2002-2011) from the sampled banks. The research entails a study of the pre-recapitalization and post-recapitalization periods hence the sample period was divided into two. This approach assists to capture the actual effect of the latest recapitalization policy of the government during the period.

The result suggests that the effect of the latest recapitalization policy was positive on the operational capability of theNigeriabanking system. There are lot of economies of scale derived from the exercise. Harnessing of resources through mergers and acquisition gave the banks the much required funds to intermediate more effectively within the financial system.