Publisher
Springer Science and Business Media LLC
Subject
Economics and Econometrics,Finance
Reference24 articles.
1. Section 35(2) (c) and (d) of the Act provide that the Governor [of the CBN] may by an order in writing under subsection (1) of this section remove for reasons to be recorded in writing with effect from such date as may be set out in the order, any manager or officer of the bank notwithstanding anything in any written law or any limitation contained in the memorandum or articles of association of the bank; … remove from office with effect from such date as may be set out in the order any director of the bank, or appoint any person or persons as director or directors of the bank.
2. See Teriba, A. (2004) Clarifications on Recent CBN Proposals. Lagos, Nigeria: Economic Associates.
3. This is a striking contrast to the yardsticks in Demirguc-Kunt, A. and Detragiache, E. (1998) The determinants of banking crisis in developing and developed countries. IMF Staff Papers 45: 81–109, According to these researchers, for an episode of distress to be classified as full-fledged crisis, the ratio of non-performing assets to the total banking assets should exceed 10 per cent or the cost of resolution should be at least 2 per cent of GDP. From these indices, and contrary to the declaration by Professor Soludo, the banking system can be classified as distressed as far back as 2004.
4. Teriba, A. (2004) Clarifications on Recent CBN Proposals. Lagos, Nigeria: Economic Associates 12.
5. The cost of recapitalizing nine distressed banks in 1990 was put at 2 billion naira. This jumped to 30.5 billion naira for 60 distressed banks at the end of 1995 and 41.4 billion naira in 1996. For 2003 and 2004, the cost was exceptional at 79.7 billion naira and 98.1 billion naira, respectively. For details see NDIC Annual Report 2003 and 2004. None of these figures compare with the 620 billion naira of the current exercise. The focus on fiscal cost of recapitalizing insolvent institutions seems to be justified by the argument that explicit recapitalization and not liquidation is the most efficient way to resolve the insolvency of every institution with substantial going concern value. See p. 444 of Kane, E. (1995) Three paradigms for the role of capitalization requirements in insured financial institutions. Journal of Banking and Finance 19: 431–459.
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