The Effect of Recapitalization on Performance of DepositMoney Banking in Nigeria IntroductionThe banking sector drives capital formation in the financial system by collecting deposit liabilities from surplus economic units, which are then converted into loanable funds of various quantities and distributed as credits to fund users. The role of banks in loan creation has been acknowledged as a crucial growth accelerator (Markjackson, Ekokemi, Nelson, & Okoyan, 2017). The ability of banks to promote economic growth and development, on the other hand, is dependent on the financial system's health, soundness, and capability. Banks, as a significant part of the financial landscape, must be reformed periodically in order to improve their competitiveness and capacity to play a critical role in financing investments, hence recapitalization is one of the most effective strategies to carry out this complex reforms. Monetary authorities raise commercial banks' operational capital on a regular basis to ensure banking industry's strength and sanity. It is a component of banking sector reforms, and various central banks throughout the world have successfully employed it as a monetary policy instrument (Attama & Yuni, 2021).A detailed investigation of Nigerian financial institutions reveals that the banking industry had major liquidity problems between 1989 and 1990. The crisis led to the failure and distress of large banks, which had a negative impact on the economy as a whole. Due to the detrimental effects of the crisis, regulatory authorities forced national and international banks to expand their capital bases from N2 billion to an astounding N25 billion in 2005. The major recapitalization effort which took effect in 2006, delivered financial sector stability, also contributed to boost and preserve depositor and other stakeholder confidence (Ighoroje, Ese and Akpokerere, 2021). Some banks were forced to increase the required amount, resulting in a series of mergers and acquisitions that reduced the number of banks from 89 to 25 in 2005 (CBN, 2006). Due to sharp practices, nonperforming hazardous assets, distresses, and corporate governance difficulties, the number has continued to drop (Osuagwua & Nwokomab, 2017). Undercapitalization, lack of a rigorous risk assessment system, and regulatory leniency on the part of the Central Bank have been blamed by certain experts, including