– The Role of Corporate Governance on the Performance of Banks in Nigeria –
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ABSTRACT
This study investigated “The role of corporate governance on the performance of banks in Nigeria”. Data for the study were sourced through questionnaires shared to various departments in both first bank of Nigeria and UBA Owerri, Imo state.
The data collected were analyzed using percentage tables. Hypotheses were tested with the aid of analysis of variance (ANOVA) statistical technique. Both null hypotheses was rejected due to the F value calculated exceeded the F value tabulated consecutively, that is 8.6>3.49 and 12.11>3.49.
The findings revealed that there are challenges faced when implementing corporate governance code in the banking sector and also the extent at which noncompliance of corporate governance code in performance of banks is low.
Based on the findings, recommendations were made; Regulatory authorities like corporate affairs commission(CAC), Central bank of Nigeria(CBN), security and exchange commission(SEC), national insurance commission(NAICOM),
Nigeria deposit insurance commission etc. should a consolidated approach towards the supervision of listed banks since corporate governance boost investors’ confidence.
Banks should instill due process of transparency, integrity and disclosure of its core concept in order to ensure shareholders’ confidence. Banks should also ensure that the issue of fraud and insider abuse should be minimized.
TABLE OF CONTENTS
Title page i
Declaration ii
Certification iii
Dedication iv
Acknowledgement v
Abstract vi
Table of content vii
CHAPTER ONE: INTRODUCTON
1.0 Background of the study 1
1.1 Statement of the problem 6
1.2 Objective of the study 10
1.3 Research questions 10
1.4 Research hypotheses 11
1.5 Significance of the study 12
1.6 Scope of the study 13
1.7Definition of terms 13
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Conceptual Review 17
2.2 Theoretical Review 18
2.3 Empirical Review 20
2.4 Research Gap 25
2.5 corporate Governance and Nigerian Banks 25
2.6 pillars of corporate Governance 40
2.7 Challenges / Weakness of Corporate Governance 41
2.8 Corporate Governance and Banking regulation 44
2.9 Bank Compliance with Regulations 48
References 51
CHAPTER THREE: RESEARCH METHODS
3.1 Research Design 53
3.2 Method of Data Collection 53
3.3 Population of the Study 53
3.3.1 Sample Size Determination 54
3.4 Sampling Procedure 55
3.5 Design and Administration of Questionnaire 55
3.6 Validity of Instrument 56
3.7 Reliability of Instrument 56
3.8 Methods of Data Analysis 57
3.9 Limitation of the Study 59
Reference 61
CHAPTER FOUR: PRESENTATION, ANALYSIS AND INTERPRETATION OF DATA
4.1 Presentation of Data 62
4.2 Analysis of Questionnaire 63
4.3 Test of Hypotheses 73
CHAPTER FIVE: SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
5.1 Summary of Findings 84
5.2 Conclusion 85
5.3 Recommendations 85
Bibliography 87
Appendix 91
INTRODUCTION
It has become a worldwide dictum that the quality of corporate governance makes an important difference to the soundness and unsoundness of banks.
Broadly speaking, corporate governance refers to the extent to which companies are run in an open and honest manner. Sanusi (2003).
Thus, effective corporate governance practice incorporates transparency, openness, accurate reporting and compliance with statutory regulations among others.
Historically, antecedents indicate that financial crisis is a direct consequence of lack of good corporate governance in banks; invariably one of the sources of instability in the banking sector is lack or inadequate practice of corporate governance.
Wherever a power is exercised to direct, control and regulates activities that affect people, there is need for good exercise of such power.
For corporate entities, particularly public liability companies, the exercise of power over the enterprise’s direction, the supervision and control of executive actions, concern for the effects of the enterprise on other parties and especially the environment, the acceptance of a fiduciary duty to be accountable, constitute the quintessential of corporate governance.
The banking distress of the last decades has posed many challenges to corporate governance in banking industry. Bank distress can be associated to lack or avoidance of code of ethics and professionalism.
Odozi(2007) expound this posting that, “Ethics, like, corporate governance, transparency and accountability, etc, is a cliché that has been abused and misused”.
The failure of banks in Nigeria, as elsewhere, has been largely due, not merely to inadequate corporate governance or leadership, but to a failure of professional ethics as manifested in numerous instances of creative accounting practices, professional’s insensitive internal control and risk management position being seriously compromised or even colluding with fraudster.
Financial scandals around the world and the recent collapse of major corporate institution in the USA has brought to the fore, once again the need for the practice of good corporate governance, which is a system of managing the affairs of corporations with a view to increasing shareholders’ value and meeting the expectations of other stake – holders.
For the financial institutions, the retention of public confidence through the enthronement of good corporate governance remains of almost importance given the role of the industry in the mobilization of fund, the allocation of credit to the deficit sectors of the economy, the payment and settlement system and the implementation of monetary policy.
BIBLIOGRAPHY
Adedipe, B. A. (2004). Corporate Governance: Key Factor in Financial Section Sector Ability. A paper delivered at the 5th Annual Finance Correspondents and Business Editors Seminar held in oweri, 26 – 28 January. Vol. 28 no.1
Adedipe, B. A. (2004). Corporate Governance: Key Factor in Financial Section Sector Ability. A paper delivered at the 5th Annual Finance Correspondents and Business Editors Seminar held in oweri, 26 – 28 January. Vol. 28 no.1
Akpan, N (2007): Internal Control and Bank Fraud in Nigeria. Economic Journal, Vol. 95, pp.118–132
Akpan, N (2007): Internal Control and Bank Fraud in Nigeria. Economic Journal, Vol. 95, pp.118–132
Anya, O. A. (2003). Corporate Governance as an Effective Tool for Combating Financial and Economic Crimes. The Nigerian Bankers. October – December.
Anya, O. A. (2003). Corporate Governance as an Effective Tool for Combating Financial and Economic Crimes. The Nigerian Bankers. October – December.
Capiro, G, Jr and Levine, R (2002): Corporate Governance of Banks: Concepts and International Observations, Paper Presented in the Global Corporate Governance Forum Research Network Meeting, April.5.
Capiro, G, Jr and Levine, R (2002): Corporate Governance of Banks: Concepts and International Observations, Paper Presented in the Global Corporate Governance Forum Research Network Meeting, April.5.
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