The Effect of Corporate Governance on Bank s Financial Performance in Nigeria
In developing economies, the banking sector among other sectors has witnessed several cases of collapses or failure; in Nigeria for instance, weak corporate governance has been at the core of all recent episodes of crisis in the banking system. This research empirically investigates the effect of corporate governance on financial performance of banks in Nigeria. The effects of relative size of non executive directors and the board size on return on investment (ROA) of a sample of 10 selected banks were investigated. Secondary data were sourced from the Nigeria Stock Exchange fact books issued for the years 2004 2013. The ordinary least square regression technique aided by SPSS 21 was employed in estimating the relationship between the selected variables. The study revealed that the relationship between corporate governance and bank performance in Nigeria is quite significant as a unit change in the board size and the relative size of nonexecutive directors increases the return on assets. The study therefore concludes that proper structuring of the stakeholders in the corporate governance team is a panacea to the perennial banking crisis experienced in Nigeria. It was recommended among others that banking sector should engage in strategic training of board members and senior bank managers especially in areas that promote internal control effectiveness, board structure and independence and in banking ethics.