International Journal of Economics and Business Administration
Articles Information
International Journal of Economics and Business Administration, Vol.1, No.2, Sep. 2015, Pub. Date: Jul. 29, 2015
Investigating the Impact of Corporate Governance on Banks’ Performance in Nigeria: A Field Experiment
Pages: 98-112 Views: 1804 Downloads: 3069
Authors
[01] Osisioma Chuka Ben, Department of Accountancy, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria.
[02] Egbunike Amaechi Patrick, Department of Accountancy, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria.
[03] Adeaga Jesuwunmi Caleb, Department of Accountancy, Nnamdi Azikiwe University, Awka, Anambra State, Nigeria.
Abstract
This study empirically investigates the impact of corporate governance on deposit money banks’ performance in Nigeria in order to ascertain whether certain financial soundness indicators affect the performance (i.e. return on asset-ROA) of Deposit Money Banks-DMBs in Nigeria. These financial soundness indicators are: capital adequacy ratio (CAR), liquidity ratio (LR), loan to deposit ratio (LDR), deposit money bank lending rate (DMBLR), nonperforming loan to total credit (NPLTC), and cash reserve ratio (CRR). They are surrogates for corporate governance. The population of the study comprised of 24 deposit money banks licensed by Central Bank of Nigeria (CBN) and insured by Nigeria Deposit Insurance Corporation (NDIC). The study adopted Panel Survey research design because the study examined the trend and changes in data collected; which also involved time series and cross-sectional data (that is, eight time series and twenty-four deposit money banks which is one hundred and ninety-two (192) observational pooled data). Top’s man formula was used to determined sample-size of 100 respondents. Primary and secondary data were used for the study; the primary data is derived from the questionnaires distributed to the shareholders (respondents) of deposit money banks, while the secondary data were gathered through the annual reports of NDIC and CBN statistical bulletin from 2006 to 2013, the data covered the period of eight years. The DMBs’ shareholders were classified into three nomenclature based on the banks’ paid-up capital requirement (i.e. #10billion, #25billion and #50billion for regional, national and international banks respectively). The study indicated that there is no statistical significant difference between corporate governance practices among the DMBs based on the perceptions of the shareholders and there is significant relationship between DMBs’ performance and corporate governance proxy variables and also the corporate governance proxy variables have impacted both positively and negatively on DMBs’ performance in Nigeria. Based on the findings, it was recommended amongst others that CBN and NDIC should organized symposia and workshop for DMBs’ shareholders in order to increase the level of awareness, and enhance their participation in fostering good and efficient corporate governance practices in banks where they own shares. The CBN and NDIC should properly monitor from time to time the financial soundness indicators which are the bed-rock of advancing and establishing robust financial banking system in the Nigeria economy.
Keywords
Impact, Corporate Governance, Banks Performance, Nigeria
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