Corporate Governance and Bank Performance in Nigeria: Further Evidence from Nigeria

Abstract

The paper examines the extent to which corporate governance contributed to financial crisis in the Nigerian banking industry between the periods 2000 and 2010. Panel data on post consolidated banks in Nigeria for the pre and post 2004 consolidation reforms were used. Two measures of bank performance (return on equity and net interest income) were used as dependant variable on a model that included both number of board members and related insider loans as measures of corporate governance. It was found that while size of board was significant positive insider loan is negatively related to bank performance. The paper concludes that insider loan was the most detrimental consequence of lack of corporate governance in the Nigeria banking industry. The issue raised in some studies about the size of the board members, this paper found a relatively higher number of board members to be more performance enhancing and aiding effective coordination of banks operating within the peculiarity of Nigerian financial system