Corporate Governance And Financial Performance Of Banks

Corporate Governance And Financial Performance Of Banks

Abstract

An transnational surge of combinations and accessions has swept the banking assiduity as boundaries between fiscal sectors and products have blurred dramatically. There’s thus the need for countries to have sound flexible banking systems with good commercial governance, which will strengthen and upgrade the institution to survive in an decreasingly open terrain. In Nigeria, the Central Bank unveiled new banking guidelines designed to consolidate and restructure the assiduity through combinations and accession. This was to make Nigerian banks more competitive and be suitable to operate in the global request. Despite all its attempts, the Central Bank of Nigeria bared that after the connection in 2006, 741 cases of tried fraud and phony involving N5.4 billion were reported. In the light of the below, this exploration examined the connections that live between governance mechanisms and fiscal performance in the Nigerian consolidated banks. And also to find out if there’s any significant relationship between the position of commercial governance exposure indicator among Nigerian banks and their performance. The Pearson Correlation and the retrogression analysis were used to find out whether there’s a relationship between the commercial governance variables and establishment’s performance. In examining the position of commercial governance exposures of the tried banks, a exposure indicator was developed guided by the CBN law of governance and also on the base of the papers prepared by the UN secretariat for the nineteenth session of ISAR( International norms of Accounting and Reporting). The study thus observed that a negative but significant relationship exists between board size, board composition and the fiscal performance of these banks, while a positive and significant relationship was also noticed between directors ’ equity interest, position of governance exposure and performance. likewise, the t- test result indicated that while a significant difference was observed in the profitability of the healthy banks and the saved banks, no difference was seen in the profitability of banks with foreign directors and that of banks without foreign directors. The study thus concludes that there’s no uniformity in the exposure of commercial governance practices by the banks. Likewise, the banks don’t expose in general how their debts are performing, by furnishing a statement that expresses outstanding debts in terms of their periods and due dates. The study suggests that sweats to ameliorate commercial governance should concentrate on the value of the stock power of board members. Also, way should be taken for obligatory compliance with the law of commercial governance while an effective legal frame should be developed that specifies the rights and scores of a bank, its directors, shareholders, specific exposure conditions and give for effective enforcement of the law.