IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF ECONOMICS AND FINANCIAL MANAGEMENT (IJEFM )

E-ISSN 2545-5966
P-ISSN 2695-1932
VOL. 8 NO. 6 2023
DOI: https://doi.org/10.56201/ijefm.v8.no6.2023.pg79.103

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Prudential Factors and Quoted Commercial Banks Capital Adequacy in Nigeria

Dr. Henry Waleru Akani, Lenyie Leesi,

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Abstract

This study examined prudential factors and quoted commercial banks capital adequacy in Nigeria. The study objective was to determine prudential variables that affect commercial banks soundness in Nigeria. Time series data were sourced from Central Bank of Nigeria Statistical Bulletin while panel data ere sourced from financial statement of the commercial banks. Capital adequacy was modeled as the function of Market size, Systemic Risk, Credit growth, Asset composition, Bank supervision, Financial Liberalization, Capital flow and Market liquidity. Panel data ordinary least square was used as data analysis methods. The study found that 31.2 percent movement in the commercial banks capital adequacy was traced to variation in the prudential variable while 68.8 percent is attributed to external factors no included in the model. The model is validated by the implications of the f-statistic and probability while the Durbin Watson Statistic proved that the variables are free from autocorrelations. The regression value from the random effect model indicates that all the variables have positive effect on capital adequacy ratio except systemic risk of the bank operating environment. 51.7 percent movement in the commercial banks capital adequacy was traced to variation in the prudential variable while 48.3 percent is attributed to external factors no included in the model. The model is validated by the implications of the f- statistic and probability while the Durbin Watson Statistic proved that the variables are free from autocorrelations. The regression value from the fixed effect model indicates that all the variables have negative effect on capital adequacy ratio except cash flow of the bank operating environment. The study concludes that the prudential variable does not explained significant variation in capital adequacy ratio of the commercial banks. The study recommend that the regulatory

keywords:

Prudential Factors, Commercial Banks, Capital Adequacy, Nigeria

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References:

Akani, H. W., & Lucky, A. L., (2015).Econometric analysis of capital adequacy ratios and the
impact on profitability of commercial banks in Nigeria. IOSR Journal of Economics and
Finance, 6 (6), 11 – 24.


Akani, H. W., & Lucky, A. L., (2016). Capital structure and shareholders value of commercial
banks in Nigeria: A Multi-Variate Study Analysis. IIARD International Journal of
Economics and Business Management, 2 (5), 1 – 24.
Akani, H. W., & Lucky, A. L., (2015). Econometric analysis of capital adequacy ratios and the
impact on profitability of commercial banks in Nigeria. IOSR Journal of Economics and
Finance, 6 (6), 11 – 24.

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