ABSTRACT
The broad objective of this study is to investigate the implications of poor corporate governance practice on the banking system stability in Nigeria. Specifically, the study sought to; examine the effect of board composition on the banking system stability in Nigeria; to evaluate the effect of board size on the banking system stability in Nigeria; to ascertain the effect of bank size on the banking system stability in Nigeria. To achieve these objectives, ex-post facto research design and panel regression analysis were adopted. The dependent variable is non-performing loan to total assets and the independent variables are board composition, board size, bank size, and net income; the data generated from individual bank audited financial reports were analyzed using panel regression models. With respect to the analyses done, the following findings were made at 5 percent level of significance, the study accepted the first alternate hypothesis that board composition has no significant effect on banking system stability in Nigeria. For the second hypothesis, the study accepted the second null hypothesis and rejected the alternate hypothesis that board size has significant effect on banking system stability in Nigeria. The study rejected the third hypothesis which states that bank size has no significant effect on banking system stability in Nigeria. The implication of these findings is that when the composition of the board increases, it affects the banking system stability so much as it increases the allowances to be paid thereby increasing the expenses to be incurred by banks. It was also seen that stability of the banking system does not really rely on the size of a bank. Higher number of non- executive independent directors promotes rational decisions and creates value for the shareholders. The role of independent directors is very important and improves the value of a bank as it shows that they can monitor the bank and help the managers to take unbiased decisions. Based on the above findings, it was recommended that the regulatory and supervisory authorities should monitor banks closely to ensure that banks comply with the corporate governance codes especially when it has to do with board size since it has a significant effect on stability of the banking system and board of directors should ensure the implementation of existing regulation such as lending exposure to an individual and make corporate governance practices a priority for the banks.
TABLE OF CONTENTS
Title Page i
Approval ii
Certification iii
Dedication iv
Acknowledgment v
Abstract vi
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of Problem 7
1.3 Objectives of the Study 9
1.4 Research Questions 10
1.5 Research Hypothesis 10
1.6 Scope of the Study 11
1.7 Significance of the Study 12
1.8 Limitations of the Study 12
CHAPTER TWO: REVIEW OF RELATED LITERATURE
2.1 Conceptual Review 14
2.1.1 Emergency of corporate governance Debate 19
2.1.2 Basic elements in the new code of corporate governance for banks in Nigeria 22
2.1.3 Principles of corporate governance 24
2.1.4 Importance of good corporate governance 25
2.1.5 Implications of poor corporate governance practice 28
2.1.6 Need for Corporate Governance in Banking System 29
2.1.7 Corporate Governance and Banking System Stability 32
2.1.8 Sources and Manifestation of Corporate Governance Practice in Nigerian Banks 34
2.2 Empirical Review 37
2.3 Theoretical framework 40
CHAPTER THREE: METHODOLOGY
3.1 Research Design 43
3.2 Population and Sample Size of the Study 43
3.3 Source of Data 44
3.4 Description of Research Variables 44
3.5 Application of Regression Model for the Study 46
3.6 Techniques for Data Analysis 47
3.7 Reliability and Validity of the Model 49
3.8 Hypothesis Testing Technique 49
CHAPTER FOUR: FINDINGS
4.1 Descriptive Statistics 51
4.2 Result of the Correlation Analysis 55
4.3 Test of Research Hypotheses 60
CHAPTER FIVE: DISCUSSION OF FINDINGS
5.1 Discussion of Result from Descriptive Analysis 64
5.2 Discussion of Findings Correlation Analysis 65
5.3 Discussion of Results from the Hypotheses Tests 65
5.4 Policy Implication of the Findings 67
5.5 Major Contribution of the Study to Knowledge Development 68
CAPTER SIX: SUMMARY, CONCLUSION AND RECOMMENDATION
6.1 Summary 69
6.2 Conclusion 72
6.3 Recommendations 72
6.4 Suggestions for further study 73 References 74
Appendix
APPENDIX
Appendix A1: DATA FOR ANALYSIS
Appendix A2: POOLED EFFECT MODEL
Appendix A3: FIXED EFFECT MODEL
Appendix A4: RANDOM EFFECT MODEL