Agnes Martins (ICMA, Henley Business School) – “Basel II/III Implementation in Nigeria: Impact on the Resilience of its Banking Sector” – PhD Seminar

Abstract:

The last twelve years have been characterised by a myriad of banking reforms in response to the 2007 to 2009 global financial crisis which propagated rapidly across the world. Nigeria, Africa’s largest country by population and gross domestic product, and a leading country for foreign direct investment, was not spared from the contagion effect. In line with best practice banking reforms all over the world, Nigeria adopted Basel II and some elements of the Basel III capital framework in 2014, after a banking sector crisis from 2009 to 2012. This study aims to investigate the impact of these reforms on the resilience of the Nigerian Banking Industry. Firstly, discussing the impact of reforms in Africa generally, it then focuses on Nigeria. It uses the Industry Bank Z-score as its primary measure of resilience. The study finds that a positive impact of the reforms is revealed after controlling for macroeconomic factors in most African countries. In Nigeria, the success of the reforms is further contingent on limiting leverage, incorporating sound corporate governance, and improving the business environment in terms of better regulation and the investment climate.