Abstract

One of the major macroeconomic variables that compliment bank performances is availability of capital. Economic theories show that inadequate capital contributes to bank failures and retards economic growth. This study however, examined the trend and the growth implications of bank capitalization in Nigeria. The secondary data used for the study were processed using sample test technique for difference between two means and the E-view for windows electronic packages. The test of difference of mean helped us to compare the means of the variables before and after recapitalization to see if there is any significant difference between the two periods. The findings showed that there is a significant difference between the two means and hence the two periods. The result indicated that post recapitalization mean at 21.58 is higher than the pre recapitalization mean of 15.09, implying that banks are more adequately capitalized and less risky after the programme. This result also indicated that recapitalization has low but significant influence on the growth of Nigerian economy compare to other variables in the model. The study strongly supported the need for the government to sustain the recapitalization policy.

Key words: Bank, recapitalization, economic growth, Basel agreement, globalization.