International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Government Bailout of Financially Distressed Banks in Nigeria: A Justifiable Strategy?
O. L. Kuye, O. J. K. Ogundele, Andrew Otike-Obaro

This paper attempts to analyze the rationale behind government bailout of cash distressed financial institutions in the 2009 financial crisis. This enquiry is important from the standpoint of the reasons that have been discovered to be the core of the national financial distress. Irresponsible corporate governance, outright fraud and excessive risk taking with moral hazards were the major culprits behind the meltdown. The research is a qualitative study which is based on secondary data gleaned from journal articles and books on the subject matter from the virtual and physical libraries. In the United State of America and Japan, government bailout of the banking system seems to be justified as the crisis emanated from error in their policy thrust. The paper concludes that in view of the high degree of financial shenanigan involved in the Nigeria’s case, government intervention (bailout strategy) would not have been justified but for the consideration of the generality of small savers, depositors and the general impact on the economy. Certain regulatory policy prescriptions were proffered to avoid future occurrence.

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