CAPITAL REGULATION AND THE PERFORMANCE OF THE NIGERIAN BANKS: NEED FOR REVIEW

Oladejo, Morufu O

Department of Accounting,

 Olabisi Onabanjo University, Ago – Iwoye, Ogun State, Nigeria

E-mail: moolad02@yahoo.co.uk

ABSTRACT

The banking sector reforms have been acclaimed to be necessary but the question is whether they yielded anticipated result. Economists differ on the level of government intervention in the economy, particularly on regulation imposed on the financial intermediaries. While some believe that many regulations are necessary in order to protect the depositor’s funds, other believes that the banks are over regulated. Although the regulatory supervision of bank was expected to bring order to the chaotic situation that had developed in financial sectors since the late 1980s, the extent to which this has been archived is a subject of debate. The reform also has implication for the Nigeria deposit insurance corporation (NDIC).Therefore this paper seeks to explore various   implications of capital regulation on the performance of the Nigeria banks with a view to proffer solutions to problems. The study adopts largely an exploratory methodology and submitted that though reforms of banks becomes necessary, there is a limit to which banks should be regulated on the issue of capital adequacy .The paper argued that consolidation arising from the  recapitalization of banks brought about lots of problems that may mar the aim of the reform if not properly approached.