IMPACT OF EFFECTIVE CORPORATE GOVENANCE ON THE FINANCIAL PERFRMANCE AND STABILITY OF FINANCIAL INSTITUTIONS IN NIGERIA 2000 – 2023

Abstract

Corporate governance is a key determinant of the financial performance of the various sectors in Nigeria’s economy and the financial sector is not an exception. This study examined and analysed the impact of corporate governance on the financial performance of financial institutions in Nigeria based on country aggregate level annual data from 2000 to 2023. Being a dominant player in the financial sector, ten deposit money banks were used to represent the operations in the sector hence panel data between 2000 and 2023 were extracted from the annual reports of ten (10) selected deposit money banks from various issues of the CBN Statistical Bulletin and Annual Reports, World Bank Global Financial Development Data available at data.worldbank.org.  and the analysis was carried out through panel data procedures with e-view 12 statistical software. The study used Board Size (BS), Directors’ Equity Holding (DEH) and Audit Committee Size (ACS) as the explanatory variables while Return on Equity (ROE) was used as the performance index. The estimated results indicated that BS and ACS had a positive and statistically significant relationship with ROE while ACS was negatively and significantly correlated with ROE. The study concluded that corporate governance is a good predictor of financial performance in the financial institutions in Nigeria.. Among the recommendations is that there should be sound and strong internal control system within the banks that will not compromise with the prudential guideline especially in the area of lending, reporting standard and disclosure requirement