Impact of Corpora
Impact of Corporate Governance on the Performance of Nigerian Deposit Money Banks
Okereke EJ & Abu S
University of Port Harcourt, Rivers State, Nigeria Imo State University Owerri
Anyanwu GI
Abstract
Key Words Corporate Governance Index Deposit Money Banks Bank Performance Index Information Disclosure This study examined the relationship between corporate governance practices in Nigerian Deposit Money Banks (DMBs) vis-à-vis their financial performances (2002-06). To accomplish this, data were collected through the use of questionnaire administered to Corporate Affairs Managers in twenty-four Deposit Money Banks (DMBs) and from the Central Bank of Nigeria (CBN) annual report and statement of accounts and Nigeria Stock Exchange (NSE) Fact Books. The data was descriptively and quantitatively analysed and the hypotheses tested using Statistical Package for Social Sciences (SPSS). The regression result of our analysis and test indicated a significant relationship and positive correlation between corporate governance and banks’ performance. It is therefore recommended, among others, that Deposit Money Banks (DMBs) in conjunction with the regulatory authorities should model various functions performed by banks and factor in all aspect of corporate governance variables as it may concern a highly regulated industry like the banking industry. This will go a long way in the designing of an optimal governance mechanism for the Deposit Money Banks (DMBs) in Nigeria and beyond.
Introduction
It is often said that there is no resting place for an organization or its chief executive, especially in a competitive environment saddled with government interventions. Banking in Nigeria has passed through several legislative and regulatory changes with a view to repositioning, sanitizing, galvanizing and stabilizing the institution (Agundu et al, 2002). These efforts of the regulators specially the Central Bank of Nigeria (CBN) tend towards fraud detection/prevention and
Okereke EJ & Abu S
University of Port Harcourt, Rivers State, Nigeria Imo State University Owerri
Anyanwu GI
Abstract
Key Words Corporate Governance Index Deposit Money Banks Bank Performance Index Information Disclosure This study examined the relationship between corporate governance practices in Nigerian Deposit Money Banks (DMBs) vis-à-vis their financial performances (2002-06). To accomplish this, data were collected through the use of questionnaire administered to Corporate Affairs Managers in twenty-four Deposit Money Banks (DMBs) and from the Central Bank of Nigeria (CBN) annual report and statement of accounts and Nigeria Stock Exchange (NSE) Fact Books. The data was descriptively and quantitatively analysed and the hypotheses tested using Statistical Package for Social Sciences (SPSS). The regression result of our analysis and test indicated a significant relationship and positive correlation between corporate governance and banks’ performance. It is therefore recommended, among others, that Deposit Money Banks (DMBs) in conjunction with the regulatory authorities should model various functions performed by banks and factor in all aspect of corporate governance variables as it may concern a highly regulated industry like the banking industry. This will go a long way in the designing of an optimal governance mechanism for the Deposit Money Banks (DMBs) in Nigeria and beyond.
Introduction
It is often said that there is no resting place for an organization or its chief executive, especially in a competitive environment saddled with government interventions. Banking in Nigeria has passed through several legislative and regulatory changes with a view to repositioning, sanitizing, galvanizing and stabilizing the institution (Agundu et al, 2002). These efforts of the regulators specially the Central Bank of Nigeria (CBN) tend towards fraud detection/prevention and
References: • Agundu, P . U. C. et al (2002), “Strategic Portfolio Synergy”, Nigeria Business and Social Reviews, Vol.1, No.1, RSUST Port Harcourt. • Black, B.S., Jang, H. & Kim, W. (2003), “Corporate Governance Index” www.econ.utah. edu/slee/phdc/corporate.governance • Central Bank of Nigeria (2007), “Regulators Seek Ways to Improve Corporate Governance”, Business News of March, 29th. • Central Bank of Nigeria (2005), Banking Supervision Annual Report. • Central Bank of Nigeria CBN (2006), Annual Report and Statement of Accounts. • Central Bank of Nigeria (2003) CBN Briefs, 2002/2003 Edition • Drobert W. et al (2003), Corporate Governance and Firm Performance: Evidence from Germany http//www.wwz.unibas.ch/cofi/publication/paper/05-03pdf • http://www/fma.org./SLC/papers/bankgovernance_1_15_06.pdf • Nigeria Stock Exchange (NSE) Fact Book (2006). • Okereke, E J., Sanni T.A, Anyanwu G I. and Ogunbiyi, S. (2009), Money and the Nigerian Financial System 3rd Ed., JESO International, Owerri. • Okereke, E J. (2003), Banking in Nigeria, Practice and Management, JESO International Owerri. • Larcker, D. F., Richardson, S.A. and Tuna, I. (2004), “How Important is Corporate Governance”, Philadelphia P A. 19104 – 6365. . • Solomon, A. (2007), “Investment Climate has Improved in Nigeria”, Nigerian Tribune of May, 11. • Starks L. et al (2003), Explaining Corporate Governance: Boards, Bylaws, and Charter Provisions* Istaks@mail.utexas.ed • Vanguard (2007), Nigeria: How Country Lost 75, Banks to Poor Corporate Governance AllAfrica.com 26 Volume 4, No.2, July-December 2011 Copyright of Indian Journal of Corporate Governance is the property of Institute of Public Enterprise and its content may not be copied or emailed to multiple sites or posted to a listserv without the copyright holder 's express written permission. However, users may print, download, or email articles for individual use.