Too big to fail theory and banks managements’ perspective in Nigeria

Too Big to Fail Theory (tbtft) is a term frequently used in banking to describe how bank regulators may deal with severe financially troubled large banks. This is with the hope of preserving public confidence in banking institutions and thereby avoids the systemic problems associated with large bank failures. The study evaluates the perception of banks’ managements as to whether tbtft leads to the emergence of strong and reliable banking sector. Primary data were collected through questionnaire administration. The techniques employed for analysis were simple percentage and Chi square. Based on the data analysis and hypothesis testing, the results of the study provide evidence for the failure to reject the null hypothesis. The study therefore concludes that the perception of banks’ managements on tbtft in relation to ensuring strong and reliable banking sector in Nigeria lacks basis, and hence recommends that the regulatory authority should concentrate on creating stable business environment instead of making provision for bailout. Finally, future researches in this area should be conducted that will utilize both primary and secondary data.