CORPORATE GOVERNANCE AND ASSET QUALITY: EVIDENCE FROM NIGERIAN LISTED DEPOSIT MONEY BANKS (DMBs)

Abstract

The well-being of any economy is entangled with that of its financial intermediaries. It is for this undeniable reason that regulators continually evaluate and closely monitor the performances of the financial institutions. Series of performance evaluation frameworks are used to check the healthiness of financial institutions but one that has gained global recognition is "CAMELS rating model". Therefore, this study evaluates the enigma between corporate governance indicators and asset quality of DMBs in Nigeria. Using ex-post facto research design, data of 2012 to 2017 were obtained from the annual reports of twelve (12) listed DMBs and analyzed using statistical tools such as simple average, ordinary least square, fixed effect, random effect techniques and decomposition of the selected DMBs. Findings revealed that UBA has the best asset quality with the average ratio of non-performing loan to total loan (0.0175), while Union bank is the least performing bank in terms of asset quality with the average ratio of non-performing loan to total loan (0.2579). The study recommended that CBN should improve on its supervisory responsibilities of the DMBs in Nigeria, especially the ones that were ranked low in order to engender a robust banking sector and sound financial system.