What is it about?
The trade-off between risk-based capital and non-risk-based capital in explaining bank performance continues to feature prominently in the bank literature. This study is another contribution to knowledge in determining the superiority of Basel capital over non-Basel capital. This is pioneer study in this direction in Nigeria.
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Why is it important?
Although regulatory/risk-based capital is a global phenomenon, the findings of our study show the superiority of equity-to-assets (a non-risk-based capital) over other measures of bank capital in explaining bank financial performance. This accounts for why investors should not focus only on risk-based capital while analysing the performance of these banks. The need to incorporate non-risk-based capital into bank capital regulatory regime is also emphasised.
Perspectives
I want to believe that paper will have capacity to influence some regulatory overhaul in the regulation of banks in Nigeria. The recent adoption of Basel III in Nigeria remains a good testimony. Also, the failure of one systematically important banks in Nigeria after acquiring another on the basis of claim of better capital adequacy on risk-based capital basis calls for adoption of a number recommendations of our study.
Abdulai Agbaje Salami
Al-Hikmah University Ilorin Nigeria
Read the Original
This page is a summary of: Bank Capital, Operating Efficiency, and Corporate Performance in Nigeria, Acta Universitatis Sapientiae Economics and Business, December 2018, De Gruyter,
DOI: 10.1515/auseb-2018-0004.
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