The Nigerian banking sector has undergone several regulatory interventions aimed at enhancing financial stability and improving bank performance, with the 2005 Central Bank of Nigeria (CBN) reforms representing the most significant. These reforms increased the minimum paid-up capital of banks from N2 billion (US14 million) to N25 billion (US173 million), reducing the number of banks from 89 to 25 through consolidation and recapitalization. The 2005 reforms were designed not only to strengthen individual banks but also to enhance the overall quality of the banking sector, promote financial stability, and ensure the sector effectively contributes to the real economy. This study examines the impact of the 2005 banking reforms on key performance indicators, including deposits, profitability, and credit expansion. By analyzing pre- and post-reform data, the research highlights how recapitalization influenced the operational capacity of banks, their ability to mobilize deposits, extend credit, and generate sustainable profits. Findings suggest that adequate capitalization significantly improved banks’ financial resilience, enhanced their capacity to fund economic activities, and contributed to a more stable and efficient banking sector. The study provides insights for policymakers, financial regulators, and banking institutions, emphasizing that strategic recapitalization and regulatory interventions can serve as effective tools to improve sectoral performance, safeguard depositors, and support broader economic growth.
Nwankwo et al. (2025) studied this question.