Impact of Bank- Specific Factors on the Capital Adequacy of Commercial Banks in Nigeria

Abstract

This study seeks to investigate the impact of bank-specific factors on the capital adequacy of commercial banks in Nigeria. This study employs panel data regression analysis of commercial banks in Nigeria from 2009 to 2020. Using the Ex-post facto research design, the study presented and analyzed the data using both descriptive statistics and inferential statistics. The specific findings reveals that nonperforming loans has negative and significant influence on capital adequacy. Also, credit risk has negative and insignificant effect on the capital adequacy of the banks. Furthermore, bank profitability has a positive and significant effect on capital adequacy of the banks. Finally, the study found that operational risk is statistically insignificant to capital adequacy of listed commercial banks in Nigeria. The study recommends that, the Central Bank of Nigeria (CBN) should enforce bank to invest more on less risky investments with fixed interest income such as government bonds, this will enable the bank to minimize the level of the bank risky assets and losses that may arise from risky asset and investment.