By Chidolue, Chinenye Alfred
One of the major macroeconomic variables that compliment bank performance is availability of
capital. Economic theories show that inadequate capital contributes to bank failures and retards
economic growth. This study however, examined the impact of bank recapitalization of banking
industry on economic growth of Nigeria. It is the aim of this research work to examine the past
bank failures as a result of inadequate capital and how recapitalization exercise in the banking
industry in Nigeria has increased the minimum paid-up capital and increased the banks’ asset
qualities. This research work is carried out to achieve some objectives among which are: to
examine the impact liquidity ratio on economic growth in Nigeria pre and post capitalization
2005, to determine the impact of cash reserve ratios on economic growth in Nigeria pre and post
capitalization 2005, to examine the impact of money supply on economic growth in Nigeria pre
and post capitalization 2005, to examine the impact of loan-to-deposit ratio on economic growth
in Nigeria pre and post capitalization in 2005. The methodology adopted for this work was
based on the use of tables and charts, which established structured relationship between the
variables studied. The data collected were only from secondary data and variable specification
used were dependent and independent variable: while GDP was used as dependent variables,
money supply, loan-to- deposit ratio and cash reserve ratio are independent variable. The findings
indicate that liquidity ratio, cash reserve ratio have no positive and significant impact on
economic growth of Nigeria as opposed to money supply to GDP and loan to deposit of
commercial bank that have positive but non-significant impact on economic growth in Nigeria. It
is, however, recommended that government should make policies that are less stringent and more
favourable for the operators to have room to operate more freely.