article · WORLD JOURNAL OF ENTREPRENEURIAL DEVELOPMENT STUDIES
An examination of ten Nigerian deposit money banks between 2004 and 2024 explores how bank recapitalisation policies influence financial stability. By applying longitudinal regression techniques to balanced panel data, the research reveals that capital adequacy significantly enhances bank resilience. In contrast, higher levels of nonperforming loans and larger bank size undermine performance. Interestingly, recapitalisation phases do not directly drive stability on their own once bank-specific fundamentals are taken into account. Instead, policy reforms foster stability indirectly by establishing stronger capital buffers. Maintaining high asset quality and disciplined capital management is therefore vital for long-term endurance. Ultimately, regulatory recapitalisation exercises must be supported by rigorous supervisory enforcement and robust risk-management practices rather than relying solely on periodic capital mandate increases.
Sound banking systems are fundamental to economic growth and financial security. This research demonstrates that mandating higher bank capital alone does not guarantee stability. Instead, financial resilience relies on ongoing risk control, reducing bad loans, and robust supervision. These insights help regulators and bank managers understand that policy interventions must focus on sustained balance sheet health rather than one-off restructuring exercises.
The abstract does not indicate a direct commercial application pathway or product, focusing instead on empirical policy analysis. However, the findings provide applied insights that can be used immediately by financial regulators, central banks, and commercial bank risk managers to refine supervisory frameworks, stress-testing approaches, and credit-risk monitoring practices across the banking sector.
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This study investigates the effect of bank recapitalization on the financial stability of Nigerian deposit money banks between 2004 and 2024. Using an ex-post facto research design and balanced panel data from ten banks, the study employs fixed-effects regression with cluster-robust errors, complemented by random-effects diagnostics and difference-GMM estimation. Capital adequacy is found to exert a positive and significant influence on financial stability, while nonperforming loans and bank size negatively affect performance. Recapitalization phases do not independently predict stability once bank-specific fundamentals are accounted for, suggesting that reforms strengthen stability indirectly through improved capital buffers rather than through the recapitalization event itself. The findings highlight the critical role of asset quality and prudent capital management in sustaining bank resilience. The study contributes to policy discussions by showing that recapitalization must be complemented with stronger supervisory enforcement and risk-management practices to achieve lasting financial stability.
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DOI: 10.56201/wjeds.v10.no9.2025.pg1.16
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