How the Implementation of the Basel Accords is changing the Culture of Nigerian Commercial Banks

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Abstract

The global financial crisis has resulted in creating significant impact on the governance of banks. It imposed various challenges on the global banking sector and their liquidity position; therefore, it resulted in the need for developing reforms that will enable banks to be governed in an effective manner and overcome the unexpected risks and uncertainties. However, these regulations will impose greater implications on the financial institutions, making it even more complex to follow the regulations. Although, it has become challenging for financial institutions to comply with the reforms of Basel, but it has also provided them with various opportunities to achieve operational efficiency. Thus, it is important for banks to follow the regulations for better governance; moreover, simultaneously they should also adopt strategies that will enable them to overcome the challenges that have been imposed by these complex reforms. In order to overcome the unexpected risks in the banking sector Basel framework has provided complete guideline for managing the leverage that banks can provide their clients and the liquidity they must maintain. Thus, the researcher has focused on gaining an insight on the Basel regulatory framework and determining the impact it creates on the Nigerian banking sector in ensuring operational efficiency in its activities.

ABSTRACTI

II

CHAPTER 5: DATA ANALYSIS1

Introduction1

Understanding the Basel Framework and its Implementation in the Nigerian Banking System2

Risks Faced by Nigerian Banks and Need for Regulations4

Need for the Banks to Adopt Basel Accord8

Basel Accords Facilitating the Banking Industry9

Adopting Basel Accord 2 in Place of Basel Accord 110

Effect of Basel Accord on the Banking Industry12

Compliance of the Banks with the Accords13

The Deficiencies13

Implications of Basel II for the Nigerian Banking System15

Summary16

CHAPTER 6: CONCLUSION18

Future Recommendations20

REFERENCES22

APPENDIX A: QUESTIONNAIRE24

CHAPTER 5: DATA ANALYSIS

Introduction

The following chapter provides an analysis of the data that has been collected through the interviews that were conducted with the respondents. The sample size chosen to conduct the research was 80; these participants were surveyed to test the hypothesis if a relation exists between the implementation of Basel Accord and risk mapping, and whether or not this has assisted banks in decreasing the level of risk associated with the assets, but also decrease the level of Non-Performing Loan (NPL). Using the 4 point likert scale the researcher formulated a series of questions to gather information, which was then analysed using the statistical and descriptive analysis. Thus, the researcher adopted a mixed research methodology in which both qualitative and quantitative data was collected. This section of the dissertation is focused on evaluating and assessing the information that has been collected mainly through primary research using the structured questionnaire. The findings of the interviews have been summarized in the table below using the statistical analysis.

Hypothesis # 1

H1: There is no strong relationship between the implementation of Basel Accord and ad hoc risk mapping and efficiency in reporting the same to the higher management that not only decrease the level of risk assets from the banks but also decrease the ...