Abstract
This study analyzed the relationship between capital market development and financial institution recapitalization in Nigeria, with a focus on assessing the effectiveness of recapitalization policies in enhancing financial stability and promoting long-term economic development. A survey research design was adopted, targeting financial managers and senior executives of commercial banks listed on the Nigerian Stock Exchange. Using the Taro Yamane formula, a sample size of 133 respondents was selected through stratified random sampling. Data were collected via structured questionnaires and follow-up interviews, and analyzed using descriptive statistics and frequency tables. The findings revealed that a majority of respondents (37.6%) considered capital market development to be very significant in supporting financial institution recapitalization, with equity and debt financing identified as the most effective mechanisms. Recapitalization policies were found to positively influence investor confidence, market performance, and liquidity, with most respondents reporting that these policies effectively strengthened financial stability. Furthermore, respondents indicated that recapitalization policies contributed to long-term economic development to a great or very great extent. In conclusion, the study demonstrated that capital market development and effective recapitalization policies play a critical role in sustaining the stability of financial institutions and promoting economic growth in Nigeria. The study recommends strengthening market mechanisms, ensuring proper policy implementation, and aligning recapitalization efforts with national economic development objectives.