ABSTRACT

In spite ofthe 1952 Banking Ordinance, the Nigerian banking sector experienced a number of bank failure.The period of 1994-2003 also witnessed a wave of systematic distress which led to another round of bank failure in Nigeria. Not withstanding the heavy impact that this ugly and recurring development has inflicted on this sector, the 2004 banking sector reforms swept away 14 additional banks. The tenacity of bank failure in Nigeria became a matter of grave and utmost concern not only to the entire nation but also to the practitioners and the academia. The aims of this study are to establish the main factors responsible for bank failure in Nigeria, to access the extent to which they have been accountable for bank failure in Nigeria, to ascertain the effect ofbank failure on Nigerian economy, to determine the preventive measures for avoiding bank failure in Nigeria and also to ascertain the implication of bank failure in Nigeria. Consequently, this research study has identified capital inadequacy, lack of transparency and non-performing loan as the major cause of bank failure in Nigeria and other factors that may also be responsible for bank failure in Nigeria, like endogenous and exogenous causes of bank failure like ownership structure, weak/ineffective internal control system, and poor management among others. Simple percentages were used to describe the data presented and conclusion drawn was that the three majors factors mentioned previously have been the main reasons of the incessant bank failure in Nigeria. The study also recommends full disclosure of all financial transactions and to separate the chairman from the managing director for all the banks