Basel 2 Accord and Deposit Money Bank Performance in Nigeria

Abstract

Deposit Money Banks recapitalization has remained a major tool for stabilizing the Nigerian banking industry in the face of increasing level of risk in the banks. This study examines the Basel 2 accord and bank performance in Nigeria. The objectives were to find out the extent shareholders’ capital, total loans and advances, asset quality (non-performing loans/total loans) and capital safety (non-performing loans/shareholders’ capital) impacts on their return on assets. Exposit facto design was adopted. Data were collected through CBN and NDIC Statistical Bulletins. Analysis was carried outing using descriptive and multiple regression methods. Findings indicated that shareholders’ capital, Total loans and advances and capital safety (non-performing loans/shareholders’ capital) have no significant impact on deposit money banks’ return on assets while asset quality (non-performing loans/total loans and advances) has significant impact on return on assets. The study recommended that monetary and banking authorities should continue to enforce Basel Accord on banks as it ensures their stability even though it negates their financial performance