ABSTRACT
This study examines Bank Distress and its effect on the economic growth of Nigeria economy for the period of 1980 to 2009. Using the Classical Linear Regression Model the ordinary Least Square Method (OLS) of analysis was adopted for the analysis of the work. The result shows that the distress in the banking sector has a significant effect on the growth of GDP in Nigeria. We recommend among others that the government should impose strict loan administration on banks and checkmate their activities closely to ensure that loans are properly appraised before granted to customers. Finally, we conclude that the Federal Government should immediately implement all the reforms necessary to make the regulatory and supervisory bodies of the banking sectors (CBN/NDIC) more effective in Nigeria to ensure good corporate governance, monitoring of credit risks and inside lending, sound investment policy, overall loan surveillance and protection from political interference among others. This will result in efficiency and stability of the banking system and their overall support to the Nigerian economy.