Capital Adequacy, Management and Performance in the Nigerian Commercial Bank (1986 - 2006)
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This study investigates the impact of bank capital adequacy ratios, management and performance in
the Nigerian commercial bank (1986 - 2006). The objectives of this paper are: to determine to what
extent bank capital adequacy ratios impact on bank performance and also to investigate the extent to
which operation expenses has impacted on the return on capital. The study captured their performance
indicators and employed cross sectional and time series of bank data obtained from Central Bank of
Nigeria (CBN) and Annual Report and Financial statements of the sampled banks. The formulated
models were estimated using ordinary least square regression method. The overall capital adequacy
ratios of the study shows that Shareholders Fund/Total Assets (SHF/TA) which measures capital
adequacy of banks (risk of default) have negative impact on ROA. The efficiency of management
measured by operating expenses indice is negatively related to return on capital. The implication of this
study, among others, is that adequate shareholders fund can serve as a veritable stimulant in
strengthening the performance of Nigerian commercial banks and also heighten the confidence of
customers especially in this era of global economic meltdown that has taken its toll in the Nigerian
financial system.
Keywords
HG Finance