Chapter One — 1.1 Background to the Study

Over the past decade, the relationship between capital adequacy and share price performance of listed banks has become a subject of considerable debate among scholars and industry practitioners alike, particularly within the context of the Federal Capital Territory, Abuja where operating conditions differ markedly from more developed markets.

the Federal Capital Territory, Abuja presents a useful setting for examining this relationship precisely because the conditions there — structural, regulatory, and behavioural — differ from those typically assumed in the broader literature, most of which draws on evidence from more developed economies.

1.2 Statement of the Problem

While capital adequacy is widely discussed in policy and industry circles, empirical evidence on its actual effect on share price performance of listed banks within the Federal Capital Territory, Abuja remains sparse and, in places, contradictory. This lack of localized, rigorous evidence makes it difficult for decision-makers to know with confidence whether current approaches to capital adequacy are helping or hindering share price performance of listed banks — a gap this study sets out to close.

1.3 Objectives of the Study

1. To examine the effect of Capital Adequacy on share price performance of listed banks in the Federal Capital Territory, Abuja.
2. To assess the extent to which capital adequacy influences share price performance of listed banks within the study area.
3. To identify the challenges associated with capital adequacy in relation to share price performance of listed banks.
4. To recommend strategies for optimizing capital adequacy in order to improve share price performance of listed banks.

1.4 Research Questions

1. What is the effect of capital adequacy on share price performance of listed banks in the Federal Capital Territory, Abuja?
2. To what extent does capital adequacy influence share price performance of listed banks within the study area?
3. What challenges are associated with capital adequacy in relation to share price performance of listed banks?
4. What strategies can be adopted to optimize capital adequacy in order to improve share price performance of listed banks?

1.5 Significance of the Study

Beyond its academic contribution to the field of finance / banking, this study has practical value for management teams within the Federal Capital Territory, Abuja seeking to understand how capital adequacy translates into measurable outcomes around share price performance of listed banks. It is equally useful to students and future researchers looking for a localized empirical reference on this relationship.

1.6 Scope of the Study

The study is limited to an examination of Capital Adequacy and its relationship with share price performance of listed banks within the context of the Federal Capital Territory, Abuja. It reflects a clearly defined scope of analysis and relies on data and perspectives available within that scope; generalizing the findings beyond this specific context should therefore be done with appropriate caution.