BOARD ATTRIBUTES AND CREDIT RISK EXPOSURE OF LISTED FINANCIAL SERVICE FIRMS IN NIGERIA: THE MODERATING EFFECT OF RISK COMMITTEE

Abstract

The existing risk governance in the financial service firms has not been able to ensure stability and sufficient performances, which resulted in excessive credit risk taking in the Nigerian financial institutions. This study examined the moderating effects of risk committee on the relationship between board of directors’ attributes and credit risk exposure of listed financial service firms in Nigeria. The study used secondary data for a period of 10 years (2010-2019) of a sample of 29 financial service firms. Panel multiple regression technique of data analysis was applied, and the study found after controlling for firm size, firm leverage and firm age that risk committee of the listed financial service firms in Nigeria has an effect on the relationships between board attributes and credit risk exposure. The study also found that there was a significant difference recorded before the moderation and after moderation of board size, board independence and board meetings with risk committee. The findings shows that the direction of the moderated variables changes after the moderation except for board gender diversity. The study also found that the level of significance of the variables changes for all the variables. This implies that the variables are affected when they are moderated with the risk committee. The study therefore recommends that the CBN, SEC and the board of directors of listed financial service firms should review the structure and composition of the risk committees of financial institutions in Nigeria.