Capital Adequacy Regulation and Financial Distress Resolution in the Nigerian Banking Industry: An ARDL Approach
Vol.6 Issue 2
This paper investigated the impact of capital adequacy regulation on financial distress resolution in the Nigerian banking industry within the ARDL framework using aggregated time series data. Capital adequacy regulation is measured by the joint significance of credit to risk weighted assets ratio, capital to total assets ratio and assets to capital ratio. The data used consist of annual time series observations from 1986 to 2018 obtained from of Central Bank of Nigeria (CBN) Statistical Bulletin and National Deposit Insurance Corporation (NDIC) as well as the factsheet of the Nigerian Stock Exchange (NSE). The plausible ARDL specification is determined using the Schwarz information criterion. We find that capital adequacy regulation measures have no significant effect on financial distress resolution in Nigeria. We therefore, recommend for the strength of Capital Adequacy Regulations.
