Nigerian Financial Research Articles

Nexus between Returns on Equity and Disclosures of Greenhouse Gas Emissions, Waste Management, and Renewable Energy

Environmental sustainability is now being continuously researched in almost all areas of humankind. This study investigated the impact of environmental sustainability disclosures (proxy by renewable energy disclosures, Greenhouse Gas Emissions disclosures, and waste management disclosures) on the returns on equity of sampled Quoted Nigerian Financial Institutions. Purposely, Fourteen Quoted Nigerian Financial Institutions on the Nigerian Exchange Group were taken as the sample size for this study. The study spanned a period of 9 years from 2013 to 2021. The analysis was carried out using panel data and employing multiple regression models to assess the relationships between the variables using secondary data collated from the annual reports of Quoted Nigerian Financial Institutions. The findings of the study reveal that the impact of renewable energy disclosures (with coefficient estimate = -0.19295, t-value = -1.41 and p-value = 0.16), Greenhouse Gas Emissions disclosures (with coefficient estimate = -0.16105 & the t-value = -1.18 p-value = 0.239, and waste management disclosures (with coefficient estimate = 0.124013, the t-value of 1 and p-value = 0.317) on returns on equity is not significant. This study concluded that the relationship between return on equity and environmental sustainability variables disclosures (proxy by Renewable Energy Disclosure and Greenhouse Gas Emissions) is unrelated.

Enterprise Risk Management Implementation and Earnings Quality: An Empirical Investigation on Nigerian Financial Sector

Researches on Enterprise Risk Management (ERM) have gained relevance in accounting and finance literature in recent years, due to more stringent regulations following the global financial crisis. Based on this recent development, this study investigates whether compliance with Enterprise Risk Management implementation impact earnings quality of fifty (50) financial firms in Nigeria. Generalised Method of Moments (GMM) estimator and difference-in-differences analysis were used to test the hypothesis of the study. We also use content analysis method to evaluate the ERM disclosure of the selected financial firms. The results shows that compliance with ERM strategy improves earnings quality and performance. In addition, the result reveals that the implementation of ERM contributes 45.6% increase to earnings quality during the post-ERM period (2019-2023) using the difference-in-differences method. This study contributes to knowledge in accounting and finance literature with respect to ERM research in under-investigated context (Sub-Saharan Africa) with a specific focus on Nigeria.

VALUE RELEVANCE OF SUSTAINABILITY REPORTING BY NON-FINANCIAL LISTED FIRMS IN NIGERIA

The Nigerian Exchange Group (NGX) issued Sustainability Reporting Guidelines in 2018 which requires that listed firms provide sustainability report, in their annual reports or as a standalone report, from 2019. The purpose is to provide additional information to assist investors in investment decisions. This study investigated the value relevance of sustainability reporting by non-financial listed firms on NGX from 2016 to 2020. All the 97 non-financial listed firms on NGX form the population for the study and sample consists of 30 most capitalised firms, proportionally selected from the 7 sectors of the non-financial firms on NGX. Content analysis and panel least square was used as methods of data analysis. Results show that sustainability reporting quantity disclosure has an insignificant negative effect (-0.01) on share price, while sustainability quality disclosure has an insignificant positive effect (0.07) on share price. It was recommended that the regulatory authorities, the Nigerian Financial Reporting Council and the NGX in addition to making sustainability reporting mandatory should enforce the assurance of the report by qualified professionals. Keywords: Agency theory, Information asymmetry, Legitimacy, Signaling theory, Sustainability reporting quality, Sustainability reporting quantity, Value relevance.

The Impact of International Financial Reporting Standards on Corporate Governance, Board Size and Income Smoothing in the Nigerian Financial Market

Income smoothing as an accounting technique is an earnings management method that has recently piqued the interest of company boards of directors, accountants, and accounting researchers. Income smoothing is the application of financial reporting principles and standards to level out earnings volatility. This paper focussed on the theoretical investigation of the impact of the International Financial Reporting Standard on corporate governance and income smoothing. This study theoretically examined the link between board size and income smoothing, with an emphasis on the intervening effect of International Financial Reporting Standards (IFRS). This paper covers a period of 2003 to 2023 and which focussed on the Nigerian Financial Market. In this study, a systematic literature review (SLR) was performed, and the research revealed crucial impact of the International Financial Reporting Standard on corporate governance and income smoothing. The SLR was performed using a sample of 100 research articles chosen from a pool of 400 papers obtained from Scopus, Web of Science, Google Scholar, ABS journal and, among other sources. Following the findings of the many research evaluated, the study discovered significant divergence and inconsistency in the results, indicating that corporate governance has either a positive or negative association with income smoothing.

Corporate Governance and Ethical Practice in the Nigerian Financial Sector

This study investigated corporate governance and ethical practice in the Nigerian financial sector. The study specifically examined the influence of corporate governance measured by audit committee, board composition, board size and Chief Executive Officer Duality on accountability and transparency and the relationship between corporate governance and ethical practice in the Nigerian financial sector. This study used a descriptive survey research design. The population of the study consists of 102 employees of Pension Fund Administration Companies (Leadway Pensure and ARM Pension) in Ondo and Ekiti States. However, due to the size of the population and the accessibility of the respondents, 50 respondents were chosen at random from the population, including 25 employees of Leadway and 25 employees of ARM. Data for the study were gathered using a self-created survey called the “Corporate Governance and Ethical Practice in the Nigerian Financial Sector” (CGEPNFC). Three null hypotheses were generated and tested at the significance level of 0.05. Data were analyzed using inferential statistics such as correlation and simple regression analysis. The study’s findings revealed corporate governance significantly influenced accountability and transparency. Also, the study revealed a positive correlation between corporate governance and ethical practice in the Nigerian financial sector. Based on the findings, the study recommended that Regulatory bodies, including the SEC and CBN, should increase their efforts to monitor and enforce corporate governance standards. Also, Organizations should invest in training programmes to instill ethical behavior in their employees.

Dynamics of Digitalisation and its Implications on the Nigerian Financial System Performance

This paper examines the impact of digitalisation on the performance of Deposit Money Banks (DMBs) in Nigeria. Using the Dynamic Ordinary Least Squares (DOLS) method, the results revealed that Web pay, and the Nigeria Inter-Bank Settlement System (NIBSS), Instant Payment (NIP) transactions, have a significant and positive impact on the Capital Adequacy Ratio expressed as a percentage of risk-weighted credit of banks’ exposure. However, Point of Sale (PoS) and Web payments (Web pay) transactions showed a positive, but insignificant impact on the Liquidity Ratio of banks for the period, indicating that both are sources of liquidity in the financial system, but not significant. Also, NIP showed a positive, but not significant impact on the Asset Quality of banks. Further, an insignificant negative effect of PoS transactions and NIP on the profitability of banks in Nigeria was also established. Importantly, mobile payment transactions exerted a positive, significant impact on banks’ profitability during the study period. These findings presuppose those technological innovations in the banking sector of Nigeria’s economy are key to the profitability of banks. Therefore, DMBs in Nigeria should continue to leverage technological innovations, using the various digital banking channels, especially, Web pay, NIP, and mobile payments to boost their performance.

Carbon Emission Disclosure and Financial Performance of Quoted Nigerian Financial Services Companies

Countries and businesses all over the world are focusing on initiatives to safeguard the environment. The goal of stabilizing greenhouse gas concentrations at a level that would preclude harmful anthropogenic interaction with the climate system is a key topic of focus during numerous endeavours. This study examined the relationship between the financial performances of quoted Nigerian financial services companies and carbon emission disclosure. The study employed ex-post facto research design and secondary data from the annual report of quoted Nigerian financial services companies. Multiple regression analysis was on a panel data set. Results show the variable that significantly returns on equity are ‘other indirect emission’ disclosure -scope 3 (coefficient = 0.416 and probability = 0.087), firm size (coefficient = 0.191 and probability = 0.089), capital intensity (coefficient = 0.000149 and probability = 0.000) and growth (coefficient = -0.0258 and probability = 0.014). The impact of other indirect emission disclosure -scope 3 on return on equity is positive and statistically significant. Also, the result shows the variable that significantly influences the return on sales are ‘other indirect emission’ disclosure -scope 3(coefficient = 0.790 and probability =0.001), firm size (coefficient = -0.395 and probability = 0.053), capital intensity (coefficient =0.000194 and probability =0.001) and growth (coefficient = 0.0360 and probability = 0.073). It was discovered that other indirect emission disclosure – scope 3 has a positive and significant effect on financial performance (ROE and ROS). This study concluded that carbon emission disclosure significantly influences the return on equity of the selected quoted Nigerian financial services companies. Also, the study concluded that carbon emission disclosure significantly influences the return on sales of the selected quoted Nigerian financial services companies.

Revenue Allocation and the Development of Ukanafun Local Government Area of Akwa Ibom State

This research was carried out to examine revenue allocation and the development of Ukanafun, the Local Government area of Akwa Ibom State. The study was motivated by persistent crises in the fiscal relations among the three tiers of government in Nigeria, being that the Federal and State governments have exploited and stifled the effective performance of the local governments. Among others, the subsidiary objective was to examine the relationship between revenue allocation and the infrastructural development of Ukanafun local government Areas of Akwa Ibom State. The theoretical framework adopted in this work was the structural-functional theory, while data were gathered through qualitative and descriptive methods. Data gathered were analyzed through the use of content analysis. The major findings of the study revealed that that the total sum of N3,759,132,819.36 was allocated to Ukanafun L.G.A. from 2021 to 2023, while the local government council undertook about 6 infrastructure/healthcare-related projects in two and a half years. The study recommended, among others, that section 162 (6) of the constitution of the Federal Republic of Nigeria should be amended to cancel the State/Local joint account which will ensure financial autonomy for the councils. The Nigerian Financial Intelligence unit should be used effectively to address financial crime and to deter public officers from corrupt practices in the Ukanafun Local government area of Akwa Ibom State.

The Impact of Internal Audit on Improving Anti-Money Laundering (Aml) and Counter Terrorist Financing (Ctf) Controls in Nigeria

This peer review conceptual paper explores the impact of internal audit on improving anti-money laundering (AML) and counter-terrorist financing (CTF) controls in Nigeria. The study aims to examine the role of internal audit in enhancing AML/CFT controls and to identify any limitations or criticisms of internal audit in this context. The researchers conducted a search for research papers published between 2015 and 2023 on the impact of internal audit in improving and AML/CTFT suing the Google Scholar Search Engine, EBSCO Hosts, Science Direct, JStor and Emeralds. The Selection Criteria for the relevant articles are the keywords in the theme of the research. The selected journals were reviewed, analysed and synthesized. The paper concludes that internal audit plays a crucial role in improving AML/CFT controls in Nigeria and suggests that internal auditors should be more involved in the design and implementation of AML/CFT controls. The paper recommends that the internal auditor must be equipped with the in-depth knowledge of the various schemes through which criminals launder money and the evolution of the various money laundering and terrorism financing schemes and how ICT tools can be used to deter these white collar crimes. The study further recommends a stronger need for collaboration between the internal auditors and the Nigerian Financial Intelligence Unit (NFIU) and the AML/CTF Department of the Central Bank of Nigeria (CBN) for information sharing on new standards and best practices to combat money laundering and counter terrorism financing

The Nigerian Financial Literacy Framework and the CBN’s Cashless Policy Impasse: Adult Education to the Rescue

The Nigerian Financial Literacy Framework and the CBN’s Cashless Policy Impasse: Adult Education to the Rescue

The Role of Central Bank in Greening the Nigerian Financial System

The Role of Central Bank in Greening the Nigerian Financial System

Money laundering conviction rate and capital formation in Nigeria

Drawing from the Financial Action Task Force (FATF, G7) recommendations and the Nigeria Anti-Money Laundering Act that provides the penance and dissuasion for crimes in Nigeria, this study sought to interrogate the efficacy of money laundering conviction rate as an instrument of anti-money laundering policy on capital formation in Nigeria. The study is hinged on contemporary deterrence theory. The study adopted the ex-post facto research design and used quarterly data from 1Q 2010 to 4Q 2019, which was sourced from the Nigerian Financial Intelligence Unit (NFIU), Economic and Financial Crime Commission (EFCC) and CBN statistical reports. Hence, Error Correction Model (ECM) was utilized to analyze the data. The findings indicate that the current money laundering conviction rate (MLCR) has a negative and non-significant effect on capital formation in Nigeria. Therefore, the study concludes that the current conviction rate is too weak to deter the act. Hence, it is recommended that the judicial system be rejigged with enabling legislation and autonomy to strengthen it to hasten the trial of such cases and ease conviction of culpable individuals, without necessarily putting innocent victims at jeopardy. Such autonomy should also be granted to the EFCC, ICPC, NFIU etc. and inter-agency synergy should be encouraged.

Leasing: A Critical Financing Option in the Nigerian Financial Arena

The study examined the effect of lease financing on the performance of quoted consumer goods companies in Nigeria for the period - 2009 to 2018. Specifically, the study assesses the effect of finance or capital lease, leveraged lease and the moderating effect of firm size on lease financing and performance of consumer goods companies. It also employed historical research design in investigating cause and effect relationship among the variables. Using Desk Survey Method, data were collated from Annual Reports and Accounts of the companies. The Ordinary Least Square (OLS) Multiple Regression Technique, as well as descriptive statistics, was employed in the analysis of data. Pre-tests such as Panel Unit Root test and Johansen/Fisher combined co-integration were adopted to check the presence of non-stationary and long-run relationship respectively. Vector Auto Regressive Lag and Panel Vector Error Correction Model were also employed to address the issue of short-run and long-run dynamics. Estimated results showed that finance lease had a significant positive effect on the performance of quoted consumer goods companies in Nigeria. Leveraged lease and firm size exerted a significant negative effect on the performance of quoted consumer goods companies in Nigeria. Based on the results, it was recommended amongst other things that the amount of debt used in the firm capital mix should be proportionate to the size of the firm in terms of its assets and capacity to produce consumer goods. Also, firms should reduce the use of finance or capital lease as a financing option given the overall negative effect of lease financing on the performance of consumer goods companies in Nigeria; and rather adopt the use of operating lease which has an overall significant positive effect, especially in the short run.

MODERN PAYMENT PLATFORMS AND THE NIGERIAN FINANICAL SERVICE ACCESSIBILITY: A RURAL BANKING MODEL

The study examined the effect of modern payment platforms on financial service accessibility in Nigeria: a rural banking model. Specifically, this study examined the effects of Automated Teller Machines-ATM operations, Mobile Banking operations-MOB, Internet Banking-INB operations, and Point of Sale-POS operations on the Number of Account Holders-NAH in Nigeria. The study spanned from 2009 to 2021. The study adopted the robust least square estimate. Meanwhile, the study sourced data principally from Central Bank of Nigeria Statistical Bulletins, and World Bank Data Bank from 2009 to 2021. The study disclosed that, ATM and INT had negative/adverse significant effect on numbers of account holders in Nigeria. However, both MOB and POS had positive/direct significant effect on numbers of account holders-NAH in Nigeria. Hence, the study concludes that mobile banking and Point on sale increased the level of financial service accessibility while ATM and INB widened the level of financial exclusion in Nigeria to a large extent. As such, banks should increase their ATM booths or terminals. Lastly, there is need for public enlightenment on the benefit that is accruable from the usage of Mobile transfer transaction. Keywords: Modern Payment Platforms, Nigerian Financial Service Accessibility, Rural Payment Model.

Audit Quality and Audit Fees: The Case of Listed Companies in the Nigerian Financial Services Sector

Audit Quality and Audit Fees: The Case of Listed Companies in the Nigerian Financial Services Sector

Do Internal Corporate Governance Code, Capital Structure, and Ownership Structure Matter in Explaining the Performance of Nigerian Financial Institutions

The rise in financial scandals and corporate failures prompted a greater spotlight on CG, particularly as it pertains to financial institutions (FI). This research looks at how the corporate governance code, CS, and ownership structure affect financial institution performance in Nigeria. The data for the study was obtained from the annual financial reports of 37 financial service institutions as the sample between 2010 and 2019. Internal corporate governance code proxy by board size, board independence, board remuneration and audit committee size, capital structure proxy by long-term debt and equity and short-term debt and equity ratio, ownership structure proxy by board ownership, ownership concentration, and foreign ownership concentration are the independent variables used in this study. The dependent variable is performance proxy by earnings per share and Tobin's Q. The study used a dynamic panel GMM estimator to deal with the panel data models. The results show that the EPS of FI in Nigeria is positive and significantly influenced by board size and short-term debt to equity ratio. Board remuneration and the long-term debt to equity/assets ratio, on the other hand, have a negative and considerable effect on FI earnings per share. Similarly, for Tobin Q, Bindp and Bremu, except board size, negatively impacted FP of the Nigerian financial service industry. Capital structure proxies by long-term debt and equity and short-term debt and equity ratio exerted a considerable impact on Tobin's Q. Equally, the ownership structure has a considerable impact on Tobin's Q. As a result, we recommend that financial institutions in Nigeria prefer equity financing over long-term debt when funding capital projects. On the other hand, short-term debt obligations should be used to fund short-term initiatives to keep the firm's performance growing. The research is necessary to ensure that debt and equity ratios are used appropriately in financial sector funding firms to maximise return on capital.

On the Comparison of Ordinary Least Squares and Quantile Regression with Nigerian Financial Data on Trade Balance, Foreign Inflow and Imports

This research work compared the Ordinary Least Squares Regression and Quantile Regression models, as well as the differences between them thereby examining the compared models in terms of goodness of fit statistic and also recommend a suitable fit model for the data collected. These methods were applied to the Nigerian Financial Data on Trade Balance, Foreign Inflow and Imports on the Nigerian Gross Domestic Product. The results via this study, shows that the influence of Trade Balance, Foreign Inflow and Imports vary on the Nigerian Gross Domestic Product depending on the quantile one is looking at. This study recommends the robustness and stability of the Quantile regression model considered as an alternative to the Ordinary Least Square Model.

Cost-Benefit Implications in the Emerging Electronic Banking Space in Nigerian Financial Sector

The paper evaluated the cost-benefit implications in the emerging electronic banking space in Nigerian financial sector. Data were collected from CBN statistical bulletin and NDIC annual report. Twenty one (21) banks operating in Nigeria constitutes the population of the study and sample size of twelve (14) years was selected through purposive sample method. Auto-Regressive Distributive Lag (ARDL) was used to analyze the data after stationarizing it through Augumented Dicky Fuller (ADF) unit root test. The findings show that ATM, POS and MB have no significant effect while WIT has negative significant on banks’ profit. The findings further reveal that the combination of these variables has positive and significant effect on banks’ profit. We therefore recommend that banks should fully utilize the benefits provided through electronic banking by ensuring that more ATM terminals are provided in order to reduce crowd. Professionals that can constantly put the machine in order should be emlpoyed and there should be constant money in the machine to enable the banks make more profits and serve the people better at all times. POS should be made available to the users and at a reduced cost without hidden charges to enable people of different categories have access to them. This will help to generate revenue to the banks and reduce their cost of transaction etc.

Conservative Business Strategy as Moderator of Board Independence and Corporate Performance Nexus in Nigerian Financial Companies

The relationship between board independence and corporate performance is one that is replete with mixed results. This paper analyzes board independence and firm performance in the presence of conservative business strategy. The issues addressed focus on whether board independence contributes meaningfully to performance and whether conservative strategy amplifies the role of board independence in mitigating agency conflict and thus improving firm value or performance. To address this, 312 firm-year observations of firms in the Nigerian financial sector from 2007 to 2018 were analyzed using the ordinary least squares (OLS) regression model, panel data model, and structural equation model (SEM). In the OLS and panel data models, board independence did not show any significant influence on performance. In both models however, conservative strategy was significant. The inclusion of conservative strategy in the model increased the coefficient of determination (R2) to 32.1% and 31%, respectively, for the OLS and panel data models. In the structural equation model, conservative strategy was also significantly related to performance but negatively related to board independence. The evidence from this study shows that conservative business strategy moderates the link between board independence and firm performance. It is therefore recommended that firms should adopt conservative strategy to gain the monitoring and advisory roles of board independence, especially when true independence cannot be guaranteed.

CEO Experience and Firm Performance: Evidence from Nigerian Financial Sector

CEO Experience and Firm Performance: Evidence from Nigerian Financial Sector