The Impact of Recapitalisation on Bank Performance: Evidence from the 2024 CBN Exercise

Bank recapitalisation exercises represent major structural interventions in the financial system, requiring institutions to raise their minimum capital bases to withstand systemic shocks and support economic expansion. This study examines the impact of the Central Bank of Nigeria's 2024 recapitalisation exercise on the financial performance and operational behaviour of affected deposit money banks. Secondary data are sourced from pre- and post-recapitalisation financial statements, Central Bank of Nigeria supervisory reports, and Nigerian Exchange Group disclosures for banks that completed capital-raising activities during the exercise. The study employs event study methodology and difference-in-differences regression to isolate recapitalisation effects on return on equity, capital adequacy ratio, non-performing loan ratio, and loan growth. The theoretical framework draws on bank capital adequacy theory, the regulatory capital literature, and the financial system stability framework. The study critically examines whether the recapitalisation has strengthened systemic resilience or primarily triggered competitive consolidation through mergers and acquisitions. The geographic spread of the analysis considers whether recapitalisation affected the loan book distribution across Nigeria's geopolitical zones, particularly the historically underserved North West and North East. Existing international evidence suggests recapitalisation can improve bank performance over the medium term but may cause short-term credit contraction. This study provides timely evidence for the Central Bank of Nigeria, the Nigeria Deposit Insurance Corporation, and policymakers evaluating the outcomes of the recapitalisation framework for supporting Nigeria's growing economy. Keywords: bank recapitalisation, bank performance, capital adequacy, Central Bank of Nigeria, financial stability