Project Topic:
Corporate Governance Practices and Financial Performance of Deposit Money Banks
This study aims to
investigate the
corporate governance practices and financial performance of Deposit Money Banks
in Nigeria. This study addressed
performing an in-depth analysis of the dynamics of corporate governance
practices mechanisms and financial performance of DMBs in Nigeria, with a
special emphasis on financial measures such as ROA, ROE, and EPS. The
study adopted an ex-post facto research design to investigate the causal
relationship between credit management and the financial performance of
Nigerian Deposit Money Banks (DMBs) over a ten-year period from 2013 to 2022.
The population encompassed all operational DMBs in Nigeria during this period.
A purposive sample of nine DMBs was selected for in-depth analysis. Data for
this study was sourced from the annual reports of nine selected DMBs. Panel
data analysis, employing OLS regression, descriptive statistics, and
correlation analysis, was conducted using EViews software. Findings reveal a
strong model fit for return on assets (ROA), with an R-squared value of 0.989,
indicating that 98.9% of the variance in ROA is explained by the independent
variables. The F-statistic (F(6, 7) = 899.01, p = 0.0000) confirms the model's
significance, showing that executive compensation, board size, board gender
diversity, contraventions penalty, and corporate size significantly affect ROA.
Conversely, the model fit for return on equity (ROE) is low, with an R-squared
value of 0.138, meaning only 13.8% of the variance in ROE is explained by the
variables. However, the F-statistic (F(6, 93) = 4.54, p = 0.0002) indicates
that the model is statistically significant. For earnings per share (EPS), the
model fit is moderate, with an R-squared value of 0.364, explaining 36.4% of
the variance. The F-statistic (F(6, 93) = 2.80, p = 0.0109) suggests that the variables
significantly influence EPS. Effective corporate governance is crucial for
Nigerian deposit money banks' financial performance and sustainability. Strong
board composition, transparent compensation, and robust risk management are
key. Regulatory support for governance codes and bank-led initiatives for board
diversity, stakeholder engagement, and director development are essential to
navigate challenges and drive sustainable performance growth.
Keywords: Corporate Governance Practices and Financial
Performance, Board Composition, Transparent Compensation.
Project Body:
Table
of Contents
Title
Page
Title i
Certification ii
Dedication iii
Acknowledgment iv
Abstract v
Tables of
Contents vi
List of Tables x
List of Figures xi
List of Appendices xii
List of Acronyms xiii
Chapter
One: Introduction
1.1
Background to the Study 1
1.2
Statement of the Problem 7
1.3
Aim and Objectives of the Study 9
1.4
Research Questions 9
1.5
Hypothesis 10
1.6
Significance of the Study 10
1.7
Scope of the Study 10
1.8
Operational Definition of Terms 11
1.9
Operationasation of Variables 12
Endnotes
Chapter
Two: Literature Review
2.1
Conceptual Review 16
2.1.1
Financial Performance 16
2.1.1.1 Return on Asset 19
2.1.1.2 Return on Equity 21
2.1.1.3 Net Profit Margin 22
2.1.2 Credit and Credit Management 25
2.1.2.1
Non-Performing Loans (NPLs) in Banks 41
2.1.2.2
Secure and Unsecured Loan 43
2.1.2.3 Loan
and Advance 44
2.1.2.4 Loan
Loss Provision 45
2.2 Theoretical Framework 46
2.2.1 Information Asymmetry
Theory 46
2.2.2 Transaction Cost Theory 50
2.3 Review of Empirical Studies 51
2.3.1 Credit Management and Financial Performance 51
2.3.2 Credit Management and Return on Asset 62
2.3.3 Credit Management and Firm’s Return on Equity 68
2.3.4
Credit Management and Net Profit Margin 70
2.4
Conceptual Model 77
2.5 Summary of the Gaps in the Literature
Reviewed 80
Endnotes
Chapter
Three: Methodology
3.1
Research Design 91
3.2
Population 91
3.3
Sample Size and Sampling Technique
93
3.4
Description of Research Instrument 93
3.5
Validity of Research Instrument 97
3.6
Reliability of Research Instrument 97
3.7
Method of Data Collection 97
3.8
Method of Data Analysis 98
Endnotes
Chapter
Four: Results and Discussion of Findings
4.1
Analysis of Diagnostic test 99
4.2
Analysis of Descriptive Statistics 101
4.3.1 Testing of Hypotheses 109
4.3
Discussion of Findings 119
Endnotes
Chapter
Five: Conclusion
5.1
Summary of Findings 131
5.2
Conclusion 132
5.3
Recommendations 134
5.4
Contribution to Knowledge 135
5.5
Suggested Areas for Further Research 137
Bibliography 139