IMPACT OF CAPITAL ADEQUACY AND THE BASEL ACCORD ON BANKS PROFITABILITY IN NIGERIA

Abstract

As the prime movers of economic life, banks occupy a significant place in the economy of every nation. It is therefore not surprising that their operations are perhaps the most heavily regulated and supervised of all businesses entities. This paper looks into the impact of capital adequacy on the profitability of banks in Nigeria. It brings into account the Nigerian banking system and the regulatory framework, the history of recapitalization and the introduction of capital adequacy in the Nigerian banking system. The paper also looks into the notions on capital adequacy and bank failures. It highlights the Basel Accord and analyse the pitfalls of Basel I, a guide to capital adequacy standards for lenders of Basel II and the impacts of Basel III on banking and financial institutions.