Nigerian Banks and the Global Financial Crisis

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The financial crisis of 2007-2008 began in July 2007 when a loss of confidence by investors in the value of US mortgage securities; this resulted in a liquidity crisis that prompted a substantial injection of capital into the financial market by the US Federal Reserve and European central banks. So far, it is estimated that World Bank have had to write down more than $550bn in asset. This crisis as precipitated major sell offs in stock exchanges around the world. According to bottom line a monthly magazine, the following are the highlights of the chronological occurrence of the crisis; “New century financial corporation stops making new loans as awarding high risk mortgage loans to consumers with problematic credit histories becomes more risky” march/April 2007 “Fannie mea, the largest financial institution in the US home loans report a $3.55bn loss” Feb 2008 “US govt. seizes control of Fannie Mae and Freddie mac” Sept 7th 2008 “Lehman brother’s investment bank declares a $600bn bankruptcy and Merrill lynch is acquired by bank of America” sept.17th 2008 “The US federal Govt. seizes Washington mutual (WAMU) in America largest ever bank failure” Sept. 26. “the US senate adopt a massive bailout plan following white house request of $700bn bailout plan” oct.1st 2008. The above high lights summarize some of the major occurrences that accounted for what we understand as today as the GLOBAL FINANCIAL CRISIS. Following the crisis in the US the Nigerian stock market which has hitherto have been noted as one of the most profitable exchange in the world received the shock when the foreign investors withdrew their investment which account for about 38.7% drop of foreign investment in the Nigerian stock exchange, hence the NSE experience a crash of about 70%, all share index feel by about 67%, following a 62% drop in market capitalization between 2008-2009. WHAT ARE THE ROLES OF THE NIGERIAN BANKING SYSTEM IN THE GFC? The new CBN governor highlighted some...
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