The 2008/2009 Banking Crisis in Nigeria: The Hidden Trigger of the Financial Crash

It is observed that, while existing literature on the 2008/2009 Nigerian banking crisis has emphasised causal factors, which can be classified as remote causes, it is silent on the immediate cause of the financial crash. Therefore, this study seeks to identify the trigger of events that culminated to the 2008/2009 banking crisis in Nigeria. The paper makes a conjecture that the trigger, lies hidden in the remote causes which, although regarded as causes of the banking crisis, do not make a definite specification of the trigger. Thus, this study sets out to examine the data of FDI and FPI inflows to Nigeria during the years of financial liberalisation. Using the applicable logic in Minsky’s financial instability hypothesis, it concludes that the sudden divestment of FPI in 2009 from the Nigerian economy, was the trigger of the financial crash.