THE EFFECT OF ADEQUATE CAPITAL ON BANK PERFORMANCE IN NIGERIA (A CASE STUDY OF ACCESS BANK PLC AND FIDELITY BANK PLC)

ABSTRACT Banks role in the economic growth and development of an economy cannot be underestimated. Though this role is significantly through the financial system, capital adequacy, measured by the capital asset ratio, is a germane factor in examining the operational efficiencies of banks. This study thus, investigated the effect of capital adequacy on bank performance in Nigeria. Primary based secondary data from selected banks were used for the study. A sample size of forty (40) respondents were randomly selected from variously questionnaire administered, thirty (30) were found useful for analysis. The study findings, among others, showed that capital adequacy had a positive and significant effect on the banks performance while liquidity has a negative and significant relationship with the performance of the selected banks implying that our result conforms to the trade-off principle that describes the liquidity and profitability relationship. Also, deposit has a negative and relationship with bank performance even though it is expected to be positive. The study thus suggested that the Central Bank of Nigeria (CBN) should pay attention to the cost incurred by banks on deposits maintained with them as this may have significant implications on the banks' capital and performance in general.