Introduction
The banking sector stimulates growth and development in an economy by serving as the transmission channel for resources to the real sector. It provides access to financial services and improves the efficiency of other financial intermediaries in a stable macro-economic environment. The sector has recently witnessed monumental challenges in the intermediary functions because of the global financial meltdown that took center stage between August and November 2008. The meltdown that began from sub-prime mortgage uncertainty at a point within United State US systematically accidentally flow over to other areas of world become full by the integration of the world financial sectors and the impact of globalization (Ronald 2008 and John 2013, Igbatayo 2011).
Period of economic mismanagement in both government establishment as well as private organization fast track the level of a global economic meltdown. All continents economies support with different set of ideas and policy, banking and others financial institutional was fast affected in the way that you cannot afford or prevent web of many different kinds networks which are the emergence of globalization, the exist situation of globalization, economic crisis are no more limits to one country, and the economic community Mark (2008). Economy of the nation has given proof and evidence of vulnerability to the emergent global economic crisis Igbatayo (2011).
Nigeria economy, the emergent global crisis has influenced negatively effects on Nigeria financial institution; cause sudden unrest in banks sectors and the stock market. Banking industry are frightened especially stiff and difficult, making the monetary authority Central Bank to inject more than N400 Billion naira or US$2.72 billion into vulnerable banks to sustain and prevent the institution from total collapse Ogbuagu (2014). This policy may have salvaged the financial sectors from collapsing totally but its effect is still have been felt in some sectors Agu (2011). In the capital market, equity prices, in the past couple of years, have fallen sharply, with the All-Share Index at the Nigerian Stock Exchange down by 33 percent at the end of December 2009, from levels recorded in December 2008. The instability in Nigeria’s financial markets poses severe challenges to policy makers, requiring urgent measures to stem the tide. During period of 2008/2009 global financial crisis were very vital a challenge to the nation economy.
The country economy had shown certain vulnerability to the states of global economic meltdown. Moreover, influence by crude oil and gas, the Nigeria economy attached on the petroleum sector, which contributed about 80 percent of government’s annual revenue and foreign exchange earnings. The petroleum industry also influences to the economy up to 50 percent of Nigeria’s annual GDP. The global oil and gas sectors get very great price increases in connection with sustained economic growth all over the world up to the mid-2008, when price of crude oil extremely at US$147.00 per barrel Olu (2009). During the time that increased, Nigeria started to enjoyed dividend of crude oil price upturned, substantial increases in foreign exchange reserves to an extend level that has never happened before to about US$60 billion Igbatayo (2011).
The question about severity and depth of the global financial crisis (GFC) on Nigeria banking sector remain unanswered An unprecedented collapse of financial institution, loss in asset/value/share price in particularly of mortgage back securities, stock market crashes, speculative bubbles, Currency crisis and Losses of job (unemployment) among others are some of the effect of global financial crisis (GFC).
According to Previous, studies have highlighted the effect of global financial meltdown on Nigeria economy Adamu (2009). Omotola (2007). Ngwube, Ogbuagu (2014) Felix, Rebecca (2015). They were mainly focused on the economy
This paper, therefore intends to analyze the immediate changes posed by the GFC on the Nigeria banking sector and focus on the initial policy response of the monetary authorities in order to save the banking sector from going into distress. In addition, if there is relationship between GFC and current Nigeria economy recession.
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