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The Nigerian Stock Exchange (NSE) was established in 1960 as the Lagos Stock Exchange. As of December 31, 2013, it has about 200 listed companies with a total market capitalization of about N12.88 trillion ($80.8 billion). All listings are included in the Nigerian Stock Exchange All Shares index. The Nigerian Stock Exchange was founded in 1960 as the Lagos Stock Exchange, on September 15, 1960, the stock exchange council was inaugurated. Operations began officially on August 25, 1961, with 19 securities listed for trading but informal operations had commenced earlier in June 1961. Operations were initially conducted inside the Central Bank building with the exchange having four firms as market dealers: Inlaks, John Holt, C.T. Bowring and ICON (Investment Company of Nigeria]]. The volume for August 1961, was about 80,500 pounds and it rose to about 250,000 pounds in September of the same year with the bulk of the investments in government securities. In December 1977 it became known as The Nigerian Stock Exchange, with branches established in some of the major commercial cities of the country. The NSE is regulated by the Securities and Exchange Commission, which has the mandate of Surveillance over the exchange to forestall breaches of market rules and to deter and detect unfair manipulations and trading practices. The Exchange has an automated trading System. Data on listed companies' performances are published daily, weekly, monthly, quarterly and annually.

The world is in the midst of a financial crisis, which threatens a worldwide economic recession. The ‘ Credit crunch’ as it has come to be known brought panic and turmoil in the summer of 2007 to the world’s financial markets causing the United States’ housing market bubble to burst. The crisis threatens a worldwide economic recession, potentially bringing to a halt more than a decade of increasing prosperity and employment for western economies and potentially wiping a staggering $1 trillion off of the value of the world economy. The global economic crisis started as a financial crisis in the United State of America in 2007. It has its root in credit contraction in the banking sector due to certain laxities in the US financial system. The crisis later spread to Europe and now has become a global phenomenon. The financial crisis at the early stage manifested strongly in the sub-prime mortgages because households faced difficulties in making higher payments on adjusted mortgages. Historically, banks used only the money they received from depositors to lend to borrowers. They were not able to obtain money from other sources other than depositors. However, in recent years, banks have been able to rely not only on depositors but also on the wholesale money markets, where they could borrow money from other banks and then resell it to their borrowers at a higher interest rate. This secondary market was in part made possible by the creation of “ credit default swaps” (CDSs). These allowed a bank to effectively insure itself against the risk that a borrower might not pay back a loan. This led to an illusion that loans were now a much lower risk and allowed such loans to be bought and sold. This then led to the creation of collateralized debt obligations (CDOs), which were bought by banks as interest-bearing investments. Since the problem of the use of credit contraction by foreign banks began, the Nigerian banking system has seriously been entangled in a financial crisis. At a time, the banks were unable to carry out their statutory function in the Nigerian economy. Like most developing countries, Nigeria felt the effect of the financial crisis largely through trade and capital flows because of the openness of the economy and the near total reliance on crude oil exports for government revenue and foreign exchange earnings. The news of the financial crisis came as a shock to the Nigerian economy.

This is because, prior to the crunch, the Nigerian banking industry experienced remarkable changes after the consolidation exercise. Shortly after the recapitalization of the capital base in the industry, the public confidence in the industry became very high which can be seen from the increase in bank’s depositors’ funds. Thus, the banks went into project financing in the real sector of the Nigerian economy. Therefore, they were able to support the process of economic growth and development of Nigeria. Before the consolidation exercise started in 2005, the Nigerian banking industry witnessed a lot of stress, uncertainty, and anxiety. Investor’s and depositor’s funds were not guaranteed, thereby making many of the banks to come under stress due to capital inadequacy. More so, the value of investor shares in the Stock Market was also depreciating. These problems greatly impaired the quality of the bank’s assets as non-performing assets became unbearable and became huge burdens on many of the banks. The financial intermediation role of the banks became heavily impaired while the macroeconomic activities seriously slowed down. This eroded the confidence of the general public which used to be a great asset of the banking sector in the past.

It was against this background, that the Central Bank of Nigeria (CBN) announced a major reform in the entire Nigerian banking industry and economy. The recapitalization of the capital base of banks constituted the first phase of the reform policy in the entire banking sector of the Nigerian economy [9]. Though, the impact of the crisis through the financial system was not as direct or devastating as those of developing and emerging market economies where there was a near obliteration of the entire financial system because of the limited integration with the global financial markets. However, when the impact of the crisis permeated Nigeria’s financial system, the soundness, and stability of the system was seriously threatened to prompt a decisive intervention of the Central Bank of Nigeria (CBN) to mitigate the emerging crisis and restore public confidence. The aim of this research study, therefore, was to ascertain the impact of the global financial crisis on the Nigerian banking industry and economy.

Modern-day Nigeria has been the site of numerous kingdoms and tribal states over the millennia. The modern state originated from British colonial rule beginning in the 19th century, and the merging of the Southern Nigeria Protectorate and Northern Nigeria Protectorate in 1914. The British set up administrative and legal structures whilst practicing indirect rule through traditional chiefdoms. Nigeria became a formally independent federation in 1960, and plunged into a civil war from 1967 to 1970. It has since alternated between democratically elected civilian governments and military dictatorships, until it achieved a stable democracy in 1999, with its 2011 presidential elections being viewed as the first to be conducted reasonably freely and fairly. Nigeria is often referred to as the "Giant of Africa", owing to its large population and economy.

With approximately 182 million inhabitants, Nigeria is the most populous country in Africa and the seventh most populous country in the world. Nigeria has one of the largest populations of youth in the world. The country is viewed as a multinational state, as over 500 ethnic groups, of which the three largest are the Hausa, Igbo and Yoruba; these ethnic groups speak over 500 different languages, and are identified with wide variety of cultures, inhabit it. The official language is English. Nigeria is divided roughly in half between Christians, who live mostly in the southern part of the country, and Muslims in the northern part. A minority of the population practice religions indigenous to Nigeria, such as those native to Igbo and Yoruba peoples.

As of 2015, Nigeria is the world's 20th largest economy, worth more than $500 billion and $1 trillion in terms of nominal GDP and purchasing power parity respectively. It overtook South Africa to become Africa's largest economy in 2014. Also, the debt-to-GDP ratio is only 11 percent, which is 8 percent below the 2012 ratio. Nigeria is considered to be an emerging market by the World Bank; It has been identified as a regional power on the African continent, a middle power in international affairs, and has also been identified as an emerging global power. Nigeria is a member of the MINT group of countries, which are widely seen as the globe's next "BRIC-like" economies. It is also listed among the "Next Eleven" economies set to become among the biggest in the world. Nigeria is a founding member of the Commonwealth of Nations, the African Union, OPEC, and the United Nations amongst other international organizations.

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The naira (NGN) is the currency of Nigeria. It is subdivided into 100 Kobo. The Central Bank of Nigeria (CBN) is the sole issuer of legal tender money throughout the Nigerian Federation. It controls the volume of money supply in the economy in order to ensure monetary and price stability. The Currency & Branch Operations Department of the CBN is in charge of currency management, through the procurement, distribution/supply, processing, reissue and disposal/disintegration of banknotes and coins. The naira was introduced on 1 January 1973, replacing the pound at a rate of 2 naira = 1 pound. This made Nigeria the last country to abandon the £sd currency system. There was a plan to redenominate the naira at 1 new naira = 100 old naira in 2008, but the plan has been suspended. Rampant inflation has occurred in Nigeria over the existence of naira. The Central Bank of Nigeria claimed that they attempted to control the annual inflation rate below 10%. In 2011, the CBN increased key interest rate for 6 times, rising from 6.25% to 12%. On 31 January 2012, the CBN decided to maintain the key interest rate at 12%, in order to reduce the impact of inflation due to reduction in fuel subsidies. In 1973, coins were introduced in denominations of ½, 1, 5, 10 and 25 kobo, with the ½ and 1 kobo in bronze and the higher denominations in cupro-nickel. The ½ kobo coins were only minted that year. In 1991, smaller 1, 10 and 25 kobo coins were issued in copper-plated-steel, along with nickel-plated-steel 50 kobo and 1 naira. On 28 February 2007, new coins were issued in denominations of 50 kobo, 1 and 2 naira, with the 1 and 2 naira bimetallic. Some Nigerians expressed concerns over the usability of the ?2 coin. The deadline for exchanging the old currency was set at 31 May 2007. The central bank stated that the ½ to 25 kobo coins were withdrawn from circulation with effect from 28 February 2007.

On January 1, 1973, the Central Bank of Nigeria introduced notes for 50 kobo, 1, 5, 10 and 20 naira. The 50 kobo notes were last issued in 1989. In 1991, 50 naira notes were issued, followed by 100 naira in 1999, 200 naira in 2000, 500 naira in 2001 and 1000 naira on October 12, 2005. On February 28, 2007, new versions of the 5 to 50 naira banknotes were introduced. Originally the 10, 20 and 50 naira were to be polymer banknotes, but the 5, 10 and 50 were delayed to late 2009 and only the 20 was released in polymer. The notes are slightly smaller (130 x 23 mm) and redesigned from the preceding issues. In mid-2009 when Sanusi Lamido Sanusi took over as CBN Governor he eventually changed the 5, 10 and 50 naira to polymer notes. On the 1000 naira notes, there is a subtle shiny strip running down the back of the note. It is a shimmery gold color showing 1000 naira. The triangular shape in the middle of the front of the note changes its color from green to blue when tilted. The main feature on the front is the engraved portraits of Alhaji Aliyu Mai-Bornu and Dr. Clement Isong, former governors of the Central Bank of Nigeria. On the first prints of the 100 naira notes issued starting December 1, 1999, Zuma Rock was captioned as located in Federal Capital Territory, while actually it is situated in Niger State. Later prints removed the reference to FCT, ABUJA. In 2012 the Central Bank of Nigeria may be contemplating the introduction of new currency denominations of N5,000. The bank has also made plans to convert ?5, ?10, ?20 and ?50 into coins which are all presently notes.

The Central Bank of Nigeria has announced that it will no longer issue banknotes on polymer citing higher costs and environmental issues. On November 12, 2014, the Central Bank of Nigeria issued a 100 naira commemorative note to celebrate the centennial of Nigeria's existence. The notes are similar to its regular issue with the portrait of Chief Obafemi Awolowo on front, but is redesigned to include a new color scheme, revised security features, the text "One Nigeria, Great Promise" in microprinting and on the back is a quick response code (QRC) which when scanned leads users to a website about Nigeria's history. The naira was scheduled for redenomination in August 2008, although this was cancelled by then-President Umaru Musa Yar'Adua), with 100 old naira to become 1 new naira. The Nigerian Central Bank stated that it will make the naira fully convertible against foreign currencies by 2009. Currently, the amount of foreign currency is regulated through weekly auctions, while the Central Bank sets the exchange rate. The naira appreciated against the dollar through 2007 due to high oil revenues. Also, the then-Bank Governor, Professor Chukwuma Soludo noted the weekly central bank auctions of foreign currency will gradually be phased out, and that the bank would "only intervene in the market as may be required to achieve defined policy objectives".