Implications of Corporate Governance on the Performance of Deposit Money Banks in Nigeria ( 2005 - 2010 )

Abstract

The issue of corporate governance has crept into the business world and the banking industry is not an exception. This necessitates the study to ascertain the implications of corporate governance on the performance of Deposit Money Banks in Nigeria in order to look inwardly the extent application of corporate governance code has enhanced the efficiency and effectiveness of the Nigerian banking industry. Also, the lingering problem of bank failure in Nigeria generated another concern with the existence of bunch of rules and regulations governing the operations of banking business. Descriptive research design was adopted reviewing corporate governance principles and theory to ascertain the problem at hand and to achieve the stated objectives. The study found among other things that non compliance to corporate governance code in the Nigerian banking industry hampers banks performance. The position of the paper is that good corporate governance culture is non negotiable since it has impact on the performance of existing banks in Nigeria. It is recommended that the Deposit Money Banks should enforce full disclosure practices and transparency practices of corporate governance thereby enhancing trust in order to survive in the competitive financial environment in Nigeria. Background of the Study The ongoing financial crisis that started in late 2007 and recent corporate scandal that lead to demise of corporate giants across the globe has brought out the importance of effective corporate governance world over. Lapses in the senior management team of corporation and the careless attitude of board of directors in Nigeria notably in the areas of ensuring adequate review of the system for compliance with the rules and regulations, coupled with inadequate system to review and approved material changes in accounting principles, continue to put corporate governance in the fore front as panacea for turn around. Corporate Governance implies rules and regulations that ensure that a company is governed in a transparent and accountable manner such that the enterprise survives and meets the expectation of its shareholders, creditors and stakeholders of which society forms a large part of the banking industry. The overall effect of corporate governance could be the strengthening of investors’ confidence in the economy of a particular country, sub-region, or region. The Enron and the Worldcom saga in the United States (Brick, Palmon and Wald, 2006) the Vivendi and the recent Parmalat scandals in Europe (Brown, Stuman and Simmering, 2003) are the most recent of such disturbing failures of credible business practice. Nigeria has also had its share of illegal business practices that have resulted in failed corporate giants.