Evaluating the Banking Sector Recapitalization for Economic Growth in Nigeria

The purpose of this chapter is to assess the contribution of the banking sector’s recapitalization to economic growth. Secondary data of all banks in Nigeria for 1980-2006 from Central Bank of Nigeria were used for the study. The findings of the study revealed higher mean GDP (N86.229 trillion) at post-recapitalization era compared to pre-recapitalization era (N56.860 trillion). Furthermore, 37% and 25% growth in GDP were recorded at post- and pre-recapitalization era, respectively. Selected indicators (bank credit, asset, saving deposit, and total loan) were all higher in the post recapitalization era. The result of t-test showed that there was a significant difference in GDP at pre and post recapitalization era at 5% significance level holding inflation constant. Bank asset had significant effect on GDP in the post-recapitalization era. Bank performance indicators could not fully account for growth and development in Nigeria’s economy though growth was recorded. Under subsequent initiatives, bank asset and total loan increased massively, while bank credit and saving deposits were stepped up via credit and savings incentives provisions for greater impact on growth in Nigeria.