EFFECT OF CORPORATE GOVERNANCE ON ASSET QUALITY OF LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study examined effect of corporate governance on asset quality of listed deposit money banks in Nigeria. The specific objectives of the study were to investigate effect of board independence on asset quality of deposit money banks in Nigeria, examine effect of board audit committee financial expertise on asset quality of deposit money banks in Nigeria and evaluate effect of board ownership concentration on asset quality of deposit money banks in Nigeria. The longitudinal research design was adopted in the study. Data were collected for the period 2012 to 2019 from financial statements of 14 listed deposit money banks and analyzed using the random effects regression after conducting descriptive statistics, Pearson correlations, heteroskedasticity and Hausman specification tests. Findings reveal that while board independence had significant effect on asset quality, board audit committee financial expertise and board ownership concentration had insignificant effects on asset quality of quoted deposit money banks in Nigeria for the period under study. It was recommended that deposit money banks equalize the number of executive and non-executive directors on their boards in order to increase the assets quality. Thus both executive and non-executive directors who have experience and are knowledgeable in accounting and finance in their boards to increase their assets quality, and encourage high block holding in their firms to enhance the assets quality.