International Journal of Advanced Research in Management and Social Sciences ISSN: 2278-6236 Vol. 2 | No. 2 | February 2013 www.garph.co.uk IJARMSS | 1 DEPOSIT- MONEY- BANKS: UNETHICAL DIVERGENCE IN CAPITAL ADEQUACY RATIOS – NIGERIA PERSPECTIVE Yunisa, Simon A.* Omah, I. (PhD)* Abstract Objectives: This study examines the role of capital adequacy ratios in deposit money banks in Nigeria. The conventional / traditional role of capital is to ensure the survival of business enterprises when losses are envisaged. Therefore, the primary objective for setting an international standard to regulate minimum capital requirement ratios for deposit money banks is to ensure that the tenacity and stability of financial institutions/banks are strengthened globally. Banks hold capital in excess of the minimum requirement to ensure that unexpected losses do not lead to non-compliance with the minimum requirement. Similarly, capital adequacy ratio (CAR) is the ratio of ďaŶk’s Đapital to risk adjusted factors which provide a platform for the regulatory authority to ŵeasure the aŵouŶt of a ďaŶk’s real assets expressed as a percentage of its risk-weighted asset and keep track, to ensure that financial institutions can absorb a reasonable amount of loss and still complies with statutory capital requirement structures. Methodology/Approach: Data proĐureŵeŶt was ďased oŶ parliolithiĐ traĐk of transactions of specific financial institutions under consideration (Nigeria). The analysis was tailored to harness the meritorious advantages of capital adequacy ratio in banks and other financial institutions. Findings: The study reveals that the higher the capital adequacy ratio, the greater the level of unexpected losses it can absorb. Validity: The study therefore, recommends that regulatory authorities should ensure that financial institutions (banks) strictly comply with the minimum capital adequacy ratios stipulated to ensure stability and efficiency in performance. Keywords: Capital Adequacy Ratios (CAR), Market Generated Capital, Regulatory Authorities, Optimum Capital Structure, Minimum Requirement, Risk-adjusted FaĐtors, Too- big- to- fail, Weighted- Assets- Ratios (WAR). *Department of Accounting and Finance, Faculty of Management Sciences, Lagos State University, Nigeria.