Board of Directors Decisions And Performance of Deposit Money Banks: An Analytical Approach

Abstract

The study examines the relationship between Board of Directors Decisions and Performance of Deposit Money Banks: An analytical approach in Nigeria for the period 1990–2018. The study measured Ordinary share capital, Debenture, Investment in subsidiaries, and Loans /advances as proxies for Board of Directors decisions while Return on Equity was used as proxies for Performance of deposit money banks for the said periods under review. In the course of the study, data were obtained from the website of Central Bank Statistical bulletin and annual report of Nigerian Deposit Insurance Corporation (NDIC). The Augmented Dickey Fuller (ADF) test option was used to test for unit root. The ARDL and Bounds test were used to estimate the short and long run relationships. This study found that at short run, the board of director’s decisions on financing and investment decisions has positive relationship with return on equity, but are not significant predictors of return on equity. However, at long run the director’s decisions on financing options i.e. ordinary share capital and debenture, investment in subsidiaries and granting of loans have a long run relationship with return on equity of deposit money banks in Nigeria for the period 1990-2018. Strong credit risk administration/procedures should be religiously followed especially (know your customer) and complied with by credit risk managers in all deposit money banks in Nigeria. Ordinary share capital should be a source of financing at the short run. These were some of the recommendations proffered, to the Government, monetary authorities, Central Bank of Nigeria, researchers and Deposit Money Banks in Nigeria.