Banks’

Corporate Governance Practices and Performance of Deposit Money Banks in Nigeria (Published)

Performance of deposit money banks in Nigeria. The specific objective of the study was to critically appraise the relationship between size of board of directors, composition of board members, frequency of board meetings and return on assets of deposit money banks in Nigeria. The data were sourced through secondary sources from annual reports and accounts of sampled deposit money banks in Nigeria. The stated Null Hypotheses were tested through data analysis by using the correlation analysis as analytical tool. The research findings reveal that board size has a positive and strong relationship with return on assets while board composition has a positive but moderately strong association with return on assets. Furthermore, frequency of board meetings has a negative and very weak relationship with return on assets of deposit money banks in Nigeria. The implication of the findings is that increased board size could result in the improvement of financial performance of deposit money banks. The research found that such increase in number of members of the board will generate the desired outcome if it centers on independent nonexecutive directors with wealth of corporate governance experience, sound and profitable contacts, good and relevant education. The negative relationship with frequency of board meetings implies that banks should begin to trim down on number of board meetings as research has found that frequent meetings signal a crisis or distress situation with perceptions of going concern issues and bank failure. The study recommends that new independent non-executive professionals with critical governance and management attributes could be introduced into the board to improve the quality of decisions, earnings and general performance. Frequency of Board Meetings should be reduced to save cost and time while virtual meetings should be called more often than physical meetings as distance is no longer a barrier.

 

Keywords: Banks’, Board Composition, Board Meetings, Board size, Financial Performance, Nigeria, Return on Assets

Risk Management Committee Gender and Likelihood of Financial Distress of Listed Deposit Money Banks in Nigeria (Published)

This study explores the effect of risk management committee gender diversity on the likelihood of financial distress among listed deposit money banks in Nigeria. The study utilizes the Nigerian Code of Corporate Governance 2018 as an instrumental variable to address endogeneity concerns related to the self-selection of gender diversity on the risk management committee. The dependent variable is the likelihood of financial distress, while the independent variable is the gender composition of the risk management committee. The sample size consists of 12 listed deposit money banks, and the data covers the period from 2017 to 2021. The analysis employs a two-stage regression analysis technique. The findings of this study reveal a significant positive effect of risk management committee gender on the likelihood of financial distress among listed deposit money banks in Nigeria. This suggests that a higher representation of a particular gender in the risk management committee is associated with an increased likelihood of financial distress. The results have important implications for policymakers, regulators, and banking institutions in Nigeria. The study highlights the need to consider gender diversity in risk management committees as a potential driver of financial distress. The findings call for proactive measures to promote a more balanced gender representation and inclusion in corporate decision-making processes within the banking sector. The findings emphasize the significance of gender diversity in risk management practices and provide valuable insights for stakeholders seeking to enhance risk assessment and mitigate the occurrence of financial distress in the banking sector.

Keywords: Banks’, Financial Distress, Gender diversity, Nigeria, Risk Management

Effect of Corporate Governance on Financial Performance of Quoted Commercial Banks in Nigeria (Published)

This study investigates the impact of corporate governance on the financial performance of Nigeria’s publicly traded commercial banks. The objective of this study is to determine if board size, board female gender, and board independence have effect on the financial performance of quoted commercial banks in Nigeria. Five (5) quoted commercial banks in Nigeria was examined, ranging from the years 2011 to 2020. Secondary data was used and obtained from the bank’s annual reports published in Nigeria Exchange Group. Cross-Sectional research design was used, and the method of data analysis used was panel multiple regression. Findings revealed  that board independence has a significant impact on financial performance ( return on assets) of quoted commercial banks in Nigeria but  shows  negative  relationship with financial performance  ( return on  assets)  of  quoted commercial banks, study further revealed that board size has a negative relationship with  bank’s financial performance (return on assets) but has  significant value  on  the  financial performance (return on assets) , findings also  revealed that at least two female board members were represented in every corporate organization studied,  female board membership has a positive relationship with banks’ financial performance (Return on Assets), but shows  insignificant value on financial performance (return on assets). The study concluded and recommended that, despite some of the independent variables shows insignificant values, Board independent, Board size, Board female gender mechanisms continue to be a critical component of corporate governance in achieving any organization’s objectives, financial or otherwise.

Citation: Orumwense E.K. and Orumwense O. (2023) Effect of Corporate Governance on Financial Performance of Quoted Commercial Banks in Nigeria, European Journal of Accounting, Auditing and Finance Research, Vol.11, No. 4, pp.1-14

 

Keywords: Banks’, Board Composition, Corporate, Governance, Nigeria, financial crisis

Effect of Microfinance Banks’ Interest Rate on Loan Repayment Capability of Borrowers (Published)

This study examined how microfinance banks’ interest rate on loan affects repayment capability of borrowers in Lapo microfinance Bank. This study examined factors affecting loan repayment plan of borrowers; with a view on the impact of promptness of loan repayment on Micro Finance Insittution sMFI loans; and find out measurse put in place by MFsI to improve repayment plan of borrowers. Lapo Bank borrowers in Osun state branch participated in the study. A sum total of 110 customers of Lapo microfinance bank participated in the study. A structured questionnaire adapted from previous studies and grounded literature review was used in collecting data. Findings from the study showed that: there is significant effect of high interest rate of MFI on the repayment plans of borrowers’ loans, the frequency of loan repayment plan significantly has effect on borrowers’ ability to payback loan, there is significant difference in the perception of borrowers on effect of high interest rate of MFI on the repayment plans of borrowers’ loans based on gender and educational level. Also, the descriptive result showed that; Majority of the borrowers agreed that high interest rate affect loan repayment, it implied that Lapo and other microfinance bank interest rate on loan is higher compare to Deposit Money Banks. Majority of the participants believes that a single digit interest rate on loan could easy the paying back of loan. The study recommends that: Since default on loans is linked to high interest rate, MFIs should consider looking into their interest rates to encourage prompt pay menrt. This may be weighed with interest rates of Deposit money banks and made relatively lower to encourage borrowers of MFIs. KEYWORDS: Microfinance, Interestrate, Borrowers, Loan.

Citation:Olufolakemi Oludami Afrogha and Oluwamayowa Iyanuoluwa Oluleye (2021)Effect of Microfinance Banks’ Interest Rate on Loan Repayment Capability of Borrowers, European Journal of Accounting, Auditing and Finance Research, Vol.9, No. 9, pp.18-29

 

 

 

Keywords: Banks’, Interest Rate, Loan, Microfinance, Repayment, borrowers

Effects of Financial Innovations on the Profitability of Deposit Money Banks in Nigeria (Published)

This study examined the effects of financial innovation on the profitability of deposit money banks in Nigeria. the general purpose of the study was to examine the effect of financial innovation on the profitability while the specific objectives was to examine the effect of  automated teller machine, electronic fund transfer,  internet banking, mobile banking and investment on information  communication technology on return on equity of deposit money banks.   The study formulated four hypotheses and used panel data regression to analyze the secondary data extracted from the annual reports and accounts of the fourteen firms for the period 2009 to 2017. Return on equity was the dependent variables while automated teller machine, electronic fund transfer, internet banking, mobile banking and investment on information communication technology on return were the independent variables. Findings of the study revealed that automated teller machine and electronic fund transfer have negative relationship with return on equity while    internet banking, mobile banking and investment on information communication technology have positive relationship with return on equity. The study recommends that deposit money   banks should adopt financial innovations, deposit money banks invest in technological innovations and banks should transform banking service by adapting to mobile banking and agency banking so that not only to providing jobs but also increase market share.

Keywords: Banks’, Deposit, Money, Nigeria, Profitability, financial innovations

Corporate Board Size, Risk Management and Financial Performance of Listed Deposit Money Banks in Nigeria (Published)

This study examined the effect of corporate board size, risk management on financial performance of listed deposit money banks in Nigeria for the period of 2011-2016. The population of the study is fifteen (15) listed deposit money banks in Nigeria out of which a sample of fourteen (14) were used for the study due to the accessibility and availability of data. Corporate board size and risk management as the independent variable was proxy with numbers of board of directors, liquidity risk, credit risk and operating risk, while the return on equity(ROE)  and earnings per share (EPS) were used to proxy financial performance. Data were collected from secondary source through the annual report and account of the banks for the period under study and the data was analysed using multiple panel regression techniques. The findings reveal that board size, credit risk and operating risk are significant negative effect on return on equity (ROE) and earnings per share (EPS) respectively. The study also shows that liquidity risk is negative and insignificant effect on ROE and EPS of the study banks in Nigeria. It is recommended among others that the banks should regulate their risk management practices and ensure they minimize the non-performing loan as it has been found empirically to reduce the quality of the firm’s financial performance. They should also reduce their operational cost for better performance

Keywords: Banks’, Corporate board size, Financial Performance, Nigeria, Risk Management

Business Consolidation and Its Impact on Financial Performance: Evidence from the Ghanaian Banking Industry (Published)

The study provides empirical examination on the impact of business consolidation or mergers and acquisitions (M&A) on the financial performance of banks in Ghana. Both descriptive and correlational research designs were employed for the study. Two banks: Ecobank Ghana Ltd and Access Bank Ghana Ltd were chosen for the study. The annual reports of the banks from pre-merger period (2009 to 2011) and post-merger period (2012 to 2015) were used for the analysis. Two analysis techniques: ratio and regression analysis were used to examine the impact of mergers and acquisitions (M&A) on the profitability of these firms. Net profit margin (NPM) and return on capital employed (ROCE) were used as proxies for financial performance and Ordinary Least Square (OLS) regression model was used to estimate the level of impact of M&A on the performance of the banks. The study revealed that mergers and acquisitions (M&A) resulted to more than 80% growth in income and the net assets immediately after acquisition. The growth in profitability continued in subsequent years, however at a decreasing rates. With regards to net profit margin and return on capital employed (ROCE), the banks observed a marginal decline after three years of acquisition. The study further found empirical evidence to support the view that mergers and acquisitions (M&A) has a positive and significant impact on both NPM and ROCE. Accordingly, it is concluded that mergers and acquisitions (M&A) has a positive and significant impact on financial performance of banks.

Keywords: Acquisition, Agency Theory, Banks’, Consolidation, Mergers, Net Profit Margin, Return on Capital Employed (ROCE), synergy

Electronic Knowledge of Customers and Employees of Jordanian Banks and Its Impact on the Quality of Banking Service: Banks of Jerash City-A Case Study (Published)

This study aims to highlight the impact of electronic knowledge in the customers of Jordanian banks on the quality of banking services, accuracy, speed of achievement and the extent of their contribution to improve banking services among workers in these banks. To achieve the objectives of the study, a questionnaire was developed and distributed to the study sample which consists of (161) employees working in Jerash banks, and this sample is the total community of the study; the census method was used to represent the community properly. Moreover, the sample was intentionally selected from seven private banks in this city, and data and information were collected by making interviews, and a questionnaire distributed to achieve the objectives of this study. The study achieved its objectives through hypotheses that were tested by several statistical methods, and to know its moral significance, as well as to reach the most important field results that represent the contribution that came out of this study. The study concludes the following: There is an interest in the subject of electronic knowledge in terms of concepts, elements, and advantages through accumulation of knowledge in the Arab administrative library. There is no clear agreement about the rankings (elements) of electronicor electronic knowledge. The level of using the electronicknowledge in the customers of banks is low. The level of relative importance of sub-variants of the dependent variable was high (quality of banking service) There is a significant moral correlation between sub-variables of the independent variable (electronicknowledge) and quality of banking services. There are few studies that joined electronicknowledge with quality banking service. Most of the study’s hypotheses were achieved. The study concluded some important recommendations, including: Promote awareness among customers about the electronic field and increase conviction of the importance of electronicknowledge in terms of saving time, fast achievement, reduce costs and accuracy of work. Facilitating procedures and various means of technology and software for the banks in order to ensure that electronic uses to keep up with global banks that deal and compete with them. Applying quality standards in the banks, and focus on the use of information technology in all branches and divisions.

Keywords: (IT), Banks’, Electronic Knowledge, Knowledge, Sector of Electronic Banking Service.

Dividend Payout Pattern: Nigeria Deposit Money Banks in Perspective (Published)

Investors invest their money with the hope to have returns that could improve their welfare in future. Dividend is one of those expectations that investors hope to get as a result of their investment. A Company pays dividend in order to encourage further investment for growth. However, the degree and extent by which dividend is made depend on the organization management decision. There has been contradicting arguments on firms dividend payout ratio such as rightist, leftist and the middle of the road hypothesis on whether firms should pay dividend or not. Hence there has not been any conclusive study on the factors that determine the dividend growth pattern of Deposit Money Banks in Nigeria. It is this perceived gap that informs the empirical analysis of growth pattern of dividend payout of quoted banks in Nigeria. The study relies majorly on secondary data sourced from the financial report of seven (7) quoted banks in the Nigeria Stock Exchange. It was found that all the explanatory variables (inflation, share price and earnings per share) have significant impact on dividend payout. The study recommends that deposit money banks in Nigeria should improve on their performance so as to increase earnings which will go a long way in determining the Dividend Payout Pattern of their banks while government should makes both investment and production environment suitable for banks to produce locally and avoid much importation to control inflation.

Keywords: Banks’, Dividend Payout Pattern, Inflation, Investment, Nigeria

DOES EARNING PER SHARE DETERMINE MARKET PRICE OF ORDINARY SHARES? EVIDENCE FROM NIGERIA BANKING SECTOR (2000 – 2013) (Published)

The study aims at examining the magnitude and nature of the relationship between earnings per share and market price of ordinary shares in Nigeria banking industry from 2004 to 2013. In addition, it aims at ascertaining the impact of earnings per share on prices of ordinary shares in Nigerian banking industry. Ordinary least squares method in the form of multiple regression was applied in the analysis. Stationarity test was conducted using the Augmented Dickey- Fuller (ADF) and Phillip Perrons (PP) tests. The result reveals that earnings per share significantly and positively influence the market price of ordinary shares; with a strong and positive association too. Earnings per share also granger causes market price of ordinary shares and these characteristics are sustainable in the long run in Nigerian banking sector. The implication of the findings is that an increase in earnings has the tendency of increasing significantly the market price of shares and earnings per share is one of the key factors responsible for fluctuations in market price of ordinary shares in Nigerian banking sector. Therefore, it is pertinent for banks targeting the enhancement of their equity price to adopt workable strategies towards attracting more deposit, increasing their lending, reducing their expenditure profile and opening up other investment avenues to improve upon their earnings.

Keywords: Banks’, Earnings, Granger, Nigeria, Regression, Shares