1.1 Background of the Study
A pandemic is a disease outbreak that spreads across countries or continents. It affects more people and takes more lives than an epidemic, which according to the World Health Organization (WHO) declared COVID-19 to be a pandemic when it became clear that the illness was severe and that it was spreading quickly over a wide area.
The shocking and sudden outbreak of the Coronavirus pandemic (Covid-19) in late 2019 and early 2020 left countries of the world in a confused state. Nigeria joined most countries of the world to witness a health pandemic in 2020, . Economic pandemic are normal Nigeria situation but health pandemic was definitely not part of her experience. However, the Covid-19 was declared by the World Health Organization (WHO) on 30th January 2020 as a Public Health Emergency of International Concern (PHEIC). On 27th February 2020, the Federal Ministry of Health announced the confirmation of the first case of Coronavirus disease in Lagos State, Nigeria. In the same communication, the Minister of Health announced that the Multi-sectoral Coronavirus Preparedness Group led by the Nigeria Center for Disease Control (NCDC) has immediately activated its National Emergency operations Center.
The Coronviridae family is subdivided into Torovirinae and Coronavirinae subfamilies. Coronavirinae is further sub classified into alpha, beta, gamma, and delta. Phylogenetic clustering accounts from the classification of these subtypes of viruses. It can be isolated from different animal species. In 1960 first case of coronavirus was notified and Canadian study in 2001 was identified approximately 500 patients as Flu-like system in which 17 to 18 cases were confirmed as infected with Coronavirus by polymerase chain reaction. These include livestock, birds, and mammals such as bats, camels, masked palm civets, dogs, mice, and cats.
To reduce the spread of the novel COVID-19, governments enacted mitigation strategies based on social distancing, national quarantines, and shutdown of non-essential businesses. The halt to the economy represented a large shock to the corporate sector, which had to scramble for cash to cover operating costs as a result of the revenue shortfall. The financial sector, and banks in particular, are expected to play a key role absorbing the shock, by supplying much needed funding (Acharya & Steffen, 2020; Borio, 2020). Under these unprecedented circumstances, central banks and governments enacted a wide range of policy interventions. While some measures were aimed to reduce the sharp tightening of financial conditions in the short term, others sought to support the flow of credit to firms, either by direct intervention of credit markets (e.g., government sponsored credit lines and liability guarantees), or by relaxing banks’ constraints on the use of capital buffers. While credit institutions are being called to play an important countercyclical role to support the real sector, these actions also have a series of implications for the future resilience of the banking sector. For instance, as lenders exhaust their existing buffers, they might also experience deterioration of asset quality, threatening the systems’ stability. As the crisis is expected to continue, even after the lockdowns are lifted and economies start to reopen, the net effect of these policy measures on the banking sector is irrecoverable. .