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This study investigated the impacts of corporate governance and institutional factors on Nigerian banking sector’s capital adequacy using secondary data from 1998 to 2014. The work adopted institution and stakeholder theories, and applied descriptive and inferential statistics. The findings are: (i) capital and debt accounted for circa 10% and 90% of Nigerian banking sector’s total assets respectively; (ii) Nigerian political system was “mostly corrupt” with very weak legal system and inefficient capital market. (iii) Nigerian political system had significant negative effect on banking sector's capital adequacy; (iv) Nigerian legal and financial systems did not have significant effect on banking sector's capital adequacy; and (v) board effectiveness in credit risk management; and management efficiency in profit maximization had significant negative effects on banking sector’s capital adequacy. Theoretically, the study reveals that banking is a blend of institutions and stakeholders. Practically, the study quantitatively revealed how a “mostly corrupt” political system could significantly decrease banking sector’s capital adequacy. Far reaching recommendations were put forward for implementation by government, regulators and banks.
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