Corporate Governance Mechanism and Bank Performance, New Insights from Emerging Economy: Evidence from Nigeria Banking Sector

Olusola Enitan Olowofela (), Hermann Azemtsa Donfack and Celestin Wafo Soh
Additional contact information
Olusola Enitan Olowofela: Department of Finance and Investment Management, College of Business and Economics, University of Johannesburg, Johannesburg 2092, South Africa
Hermann Azemtsa Donfack: Department of Finance and Investment Management, College of Business and Economics, University of Johannesburg, Johannesburg 2092, South Africa
Celestin Wafo Soh: Department of Mathematics & Statistical Science, College of Science, Engineering and Technology, Jackson State University, Jackson, MS 39217, USA

JRFM, 2025, vol. 18, issue 2, 1-19

Abstract: We investigated the relationship between corporate governance mechanisms and bank performance in the Nigerian banking sector. We focused on data from 2012 to 2022 extracted from the balance sheets of deposit money banks in Nigeria. We employed the Generalized Method of Moments (GMM) with Stata 13 and Python library to analyze the data. The research underscores the positive influence of non-executive directors and effective credit risk management on risk-adjusted return on assets in the Nigerian banking sector. Conversely, larger board sizes and higher levels of independence negatively impact performance. Notably, corporate governance variables do not significantly determine risk-adjusted return on equity, except for a negative association with lending rates. Practical implications include advocating for non-executive directors, optimizing board size and prioritizing robust credit risk management for enhanced financial outcomes. This research contributes to understanding the crucial role of corporate governance in the Nigerian banking sector, emphasizing its significance for prudent risk management and stakeholder confidence.

Keywords: corporate governance; risk adjusted return on assets (RAROA); risk adjusted return on equity (RAROE); board size; credit risk (search for similar items in EconPapers)
JEL-codes: C E F2 F3 G (search for similar items in EconPapers)
Date: 2025
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/1911-8074/18/2/92/pdf (application/pdf)
https://www.mdpi.com/1911-8074/18/2/92/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jjrfmx:v:18:y:2025:i:2:p:92-:d:1586261

Access Statistics for this article

JRFM is currently edited by Ms. Chelthy Cheng

More articles in JRFM from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().