Effect of Corporate Governance on Asset Quality of Banks (Evidence from Nigeria)
Journal Title: International Journal of Academic Research in Business and Social Sciences - Year 2018, Vol 8, Issue 12
Abstract
The study examined the effect of corporate governance dynamics on the asset quality of Nigerian banks. The objectives of this study are to examine the extent to which board size affects asset quality of banks in Nigeria; ascertain the degree to which board credit committee size has effect on asset quality; assess the effect of shareholders’ role on asset quality and analyse the effect of depositors’ role on asset quality of Nigeria banks. To achieve these objectives, four research questions and four hypotheses stated at 5% level of significance were formulated. The study adopted the ex-post facto research design while data for the study were sourced from the financial statements of the ten (10) banks selected using convenience sampling, essentially considered on the basis that they are quoted on the Nigeria Stock Exchange (NSE) and also had complete records within the period. The hypotheses were tested using the Ordinary Least Square (OLS) regression analysis. The study found that board size had significant positive influence on asset quality of Nigerian banks; credit committee composition had insignificant negative effect on asset quality; shareholders’ role had significant positive effect on asset quality; and depositors’ interest had significant positive effect on bank performing loans. The study concludes that while board size and credit committee composition had insignificant influence on asset quality, the role of the shareholders and depositors were positive and significant. As part of the recommendations, banks should appoint people with the right exposure, qualification and sense of commitment to the board as it was shown that asset quality matrix is not a function of size of the board or number of members in the credit committee. The study contributed to knowledge by modifying existing models and also updating literature in this area.
Authors and Affiliations
Ikenna Egungwu, Ngozi Ursula CNA Egungwu
Keywords
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- EP ID EP596940
- DOI 10.6007/IJARBSS/v8-i12/5372
- Views 86
- Downloads 0
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