Capital Adequacy Standards, Basle Accord and Bank Performance: The Nigerian Experience (A Case Study of Selected Banks in Nigeria)

摘要

Capital adequacy standards for banks that operates internationally is of major concern for bank regulators worldwide. In consequence, the Bank for International Settlements, (BIS) established a framework for measuring capital adequacy for banks in the group of ten (G10), industrialized nations of the world. The adoption of the standards in the city of Basle came to be referred as the Basle Capital Accord on Capital Adequacy Standard. The Capital adequacy Standard under the Basle accord has been widely accepted worldwide by bank regulators and was implemented by the Central Bank of Nigeria, effective December 2005. The objective of this study is to investigate the impact of the adoption of the Capital Adequacy Standards on the performance of Nigerian banks. The study involved the use of ordinary least squares (OLS) estimation technique to examine and determine the effect of the independent variables – loans and advances, shareholders funds, total assets and customer deposits – on the dependent variables – Earnings per share (EPS) and profit after tax. The results of the analysis showed that capital adequacy standards, exert a major influence on bank performance. In addition the impact of the Nigerian monetary authority on the new capital requirements was found to be complemented with the adoption of the Basle accord framework. The study concludes with the recommendation that the CBN should not rely soly on the capitalization of banks as a determinant of bank performance but also should concentrate on efficient and effective bank supervision and risk management.