IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 10 NO. 2 2024
DOI: https://doi.org/10.56201/ijbfr.v10.no2.2024.pg111.130

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Corporate Governance and Banking System Stability in Nigeria

Ele, Linus Egwu, Michael, Emmanuel Ikpe

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Abstract

The study of corporate governance and banking system stability in Nigeria became necessary as banks are failing, acquired and/or merged from time to time. The reason behind the failure or merger/acquisition may not be far from mismanagement and abuse of trust which lead to erosion of asset values of the banks involved as a result of non-performing loans. The study adopted ex post facto research design and used annual time series for the period ranging between 2001 and 2022. Growth rate of banks’ total assets (GTA) was used as dependent variable and proxy for corporate governance while loans-to-deposit ratio (LDR), non- performing loan ratio (NPLR), loans loss provision (LLP) and liquidity ratio (LIQR) were used as bank stability variables. Results show that LDR and LIQR have positive relationship with corporate governance whereas LLP and NPLR exhibit negative relationship with corporate governance. It is recommended that Banks management should be transparent and ethical in all their dealings in order to attain increase in value and wealth maximization for the owners of the banks. Besides, banks should work in consonant with policies and directives of the regulators from time to time to enhance the health of the banks and continuous stakeholders’ welfare.

keywords:

Corporate Governance, Non-performing Loans, Bank Stability, Loans-to-Deposit

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References:

Abdullah W, Ismail S and Jamaluddin N. (2008). The Impact of Board Composition,
Ownership and CEO Duality: The Malaysian evidence: Malaysian Accounting
Review 7(2).
Abel, A.A. (2008). “Corporate Governance and the Issue of Shareholders’ Democracy. The
Nigerian Accountant, 3(4).56-71.

Adegboye, A., Ojeka, S. and Adegboye, K. (2020). Corporate governance structure, Bank
externalities and sensitivity of non-performing loans in Nigeria. Cogent Economics
and Finance, 8, 1-21

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