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FINANCIAL SOUNDNESS INDICATORS AND EFFICIENCY OF LISTED DEPOSIT MONEY BANKS IN NIGERIA
Get PDFThe efficiency of a country’s banking industry is key to the stability of its financial system. However, there has been an increasing scholarly debate on the factors that affect bank efficiency. Some scholars argue that efficiency is enhanced by mainly improvements in the strategic internal resources of a bank such as firm specific attributes like capital, assets, and liquidity while other scholars posit that industry wide factors and macroeconomic variables such as market structure and interest rate respectively are also integral to bank efficiency. Notwithstanding the divergent opinion, measuring bank efficiency using International Monetary Fund’s core set of financial soundness indicators, which are firm specific attributes that stand for capital adequacy, asset quality, earnings, liquidity and sensitivity to market risk, has become widely accepted in finance literature. Using bank-level analysis approach, this paper assesses the effect of financial soundness indicators on efficiency of listed deposit money banks in Nigeria for the period 2010-2018. The paper, which applies correlational research design, uses firm-level secondary data extracted from the annual reports and accounts of 14 out of the 22 licensed banks as at 31st December, 2018. The robust fixed effect regression result used for analysis shows that overall; the core set of financial soundness indicators has significant effect on efficiency of deposit money banks in Nigeria for the period under review. At the level of individual components, all the variables except asset quality have significant effect on efficiency though the direction of the relationship between efficiency and both capital adequacy and profitability is not in line with theoretical expectation. The paper recommends amongst other things that bank management should continue to use financial soundness indicators in benchmarking the efficiency of their operations
INTERNAL CONTROL SYSTEM EFFECTIVENESS AND FRAUD PREVENTION INNIGERIAN DEPOSIT MONEY BANKS
Get PDFOver the years, there has been an emphasis not only on the presence of internal control system in the banking sector but also the efficiency of internal control. There is possibility for internal control unit to be present but they are ineffective. This study was carried out to examine internal control system effectiveness and fraud prevention in deposit money banks in Nigeria. The study adopts a descriptive analysis which helps in summarizing the data. Inferential statistics was used such as the multiple regression analysis to explain internal control system effectiveness and fraud prevention. Questionnaires were administered to Nineteen deposit money banks in Nigeria and a total of 40 questions were asked and answered accurately. Cronbach Alpha Coefficient was used to test the reliability of the measurement and as such are reliable because the entire alpha coefficients are greater than 0.6. The findings of the study show that there is a positive and significant relationship between control environment and fraud prevention mechanism The overall result showed that control environment (CE), risk assessment (RA), information and communication (IC) and monitoring (MO) have a positive and significant impact on fraud prevention, whereas control activities have a positive but insignificant effect on fraud prevention. Based on the findings, the study recommends that organizations’ management and those saddled with the responsibility of governance of companies should always be alert to all possible circumstances (business risks) that may threaten the banks’ ability in achieving its set objectives. Management can achieve this through regular assessment of the operating environment of the organization to identify threats arising from competition, legislation, technological changes, etc. The banking sectors should carryout regular reviews of their control system. This can be done at least semi-annually. The management should ensure it receives timely, relevant, and reliable reports for decision-making
BOARD DIVERSITY AND FINANCIAL PERFORMANCE OF ISLAMIC BANKS IN MALAYSIA
Get PDFCorporate governance of Islamic Banks (IBs) presents entirely unique and different complexities compared to conventional counterparts. Despite these complexities and some reported cases of financial scandals involving the IBs, studies of the corporate governance of the IBs are still lacking. This paper examines the board aspect of Islamic banks. The study specifically examined the impact of board diversity and financial performance IBs in Malaysia. The sample of the study comprised of the 16 IBs operating in Malaysia over six (6) years from 2015 to 2020. Data was analysed with regression method of data analysis. The study also utilises t-test and perform robustness test for the predictor variables. The overall finding revealed that, diversity in the board of the IBs induces better financial performance. Additionally, the research also found gender diversity and board directorships attributes of the board’s positive and significantly linked with the financial performance of the IBs. Considering the result of the study we argue that more diverse board could not only guarantee proper monitoring and resource provision, but could also improve the independence of the board in its role as the trustee of shareholders, especially in complex institutions like IBs. By having a well inclusive board, IBs will benefit equally from valuable abilities across demographic, ethnic and religious groups in the society. Furthermore, by ensuring very well inclusive boards, IBs can effectively contribute to enhancing social welfare of various segments in the society. This is the first study best known to the authors that provides empirical evidence on the influence of gender diversity, board national, board duality and board skills and expertise among board on the financial performance of IBs. This paper could be referred to by the shareholders and other stakeholders
INTERLOCKING BOARD MEMBERSHIP AND FINANCIAL PERFORMANCE OF LISTED FIRMS IN NIGERIA
Get PDFThis study examined interlocking board membership and financial performance of listed firms in Nigeria. A sample of fifty (50) listed non- financial firms was selected from the population using the systematic random sampling technique. The data for the period, 2007 to 2018 was analyzed using the descriptive statistics, correlation matrix and the general method of moment (GMM). Findings revealed that the one lag value of the returns on equity is statistically significant and positively correlated with the firms’ financial performance. Interlocking board membership (IBM) exerted a negative and significant impact on the firms’ financial performance. Board size exerted a positive impact on the performance of the firms, suggesting that a relatively large board size engenders conflicts in decision making and may hamper financial performance of firms. Firm size was positive and significant on the firm performance in the reference period. Implicitly, board interlocks under the upper echelon theory, irrespective of the size of the board is yet a key driver of corporate financial performance in Nigeria. The study recommends that managerial interlocking board membership should be examined in the context of agency relationship on firm performance. There is need for regulators to design a framework on the proportion of board interlocks inclusion in firm board. Firm should be mandated to disclose proportion of board interlock as it will guide researchers in carrying out critical analysis for policy recommendations
EFFECT OF CORPORATE GOVERNANCE CODES ON RETURN ON EQUITY OF NIGERIAN DEPOSIT MONEY BANKS
Get PDFThe central bank of Nigeria in a bid to curb the turbulence that had troubled the Nigeria banking industry for decades introduced the Codes of Corporate Governance in order to stabilize the industry and enhance the banks performances. It is against this backdrop that this study examined the effect of corporate governance codes on the return on equity of the Nigeria deposit money banks. The study used secondary data from a sample of ten banks covering eight years and employed multivariate regression techniques, ordinary least squares in the study. The study finds that corporate governance codes have an insignificant positive effect on return on equity of the selected banks. Consequently, the study recommends that corporate governance codes should be further reviewed so that they can significantly improve on profitability of deposit money banks in Nigeria
ARE THERE FACTORS INFLUENCING AUDITORS’ INDEPENDENCE IN LISTED FIRMS? EMPIRICAL ANALYSIS FROM NIGERIA
Get PDFQuest for a potent measure of audit independence in the light of the increasing collapse of firms after an external auditor report informed the rationale behind this research. The study investigated the factors driving auditor independence in Nigeria using data from a sample of eighty eight (88) listed firms in the period 2015 to 2019. The Correlation statistic and dynamic panel least squares method. The result indicates that audit committee independence, managerial ownership and audit tenure were significant and exerted a favourable link on auditor independence. Board gender diversity was negative on auditor independence. The stances of the research is that audit committee independence, managerial ownership and audit tenure are key drivers of auditor independence of listed firms in Nigeria
DOES OPTIMAL BOARD STRUCTURE INFLUENCES DIVIDEND POLICY OF THE NIGERIAN DEPOSIT MONEY BANKS?
Get PDFThis study examines whether optimal board structure influences dividend policy of the Nigerian Deposit Money Banks (DMBs). Optimal board structure in the contest of this study is defined in term of appropriate board size with greater proportion of independence. It postulated that the board of directors comprises of executive and non[1]executive directors and its size depends on the complexity of their business. The study relies on agency and resource dependency theory of corporate governance to explain the inconsistence in the board structure of an organisation. Several literatures were reviewed to justify the reality of governance as critical factors that may influence dividend policy. The paper utilized panel data approach and stata software package was used to analyse the data collected from 8 deposit money banks spinning from 2010 to 2019. Findings from the result suggest that executive directors positively drive dividend policy but not significant while non executive director is negative but significantly influence dividend policy. The earnings per share is positive and also significant. The study also confirms that optimal board sizes represented by dummy variables are not significant in the Nigerian banking sector. The study recommends that commercial bank should fix their board size in line with their circumstances and policy should be directed to improve the independence and quality of non-executive directors present in the board
RISK CONTROL AND FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA
Get PDFOptimal risk management strategy is vital for the reduction of threats that may hinder business performance.This investigation was conducted to study the influence of risk control on financial performance of deposit money banks quoted on the Nigeria Exchange. The study adopted the ex-post facto research design while the population of the study comprised of all quoted deposit money banks on the Nigerian Exchange from 1st Jan.2009 to 31st Dec.2020. The sample size of 8 banks was selected randomly by adopting the Yamane formula. Secondary data was extracted from the financial statements of the sampled banks covering the period of 10 years, 2009 to 2018. The study found that liquidity risks and credit positively significantly impact the financial performance of deposit money banks in Nigeria. Whereas, asset turnover ratio asserts an insignificant negative effect on the performance of banks in Nigeria. Additionally. Non- performing loan ratio significantly negatively impacted performance of deposit money banks in Nigeria. Based on these findings, the study recommends that, Nigerian deposit money banks should step up their liquidity and credit risks for optimum performance while trying to utilize the available resources for maximum revenue generation. More so, deposit money banks should monitor its non-performing loan ratio for optimum performance
ACCOUNTING FOR BIOLOGICAL ASSETS AND AGRICULTURAL PRODUCE: DETERMINANTS OF COMPLIANCE WITH IAS 41 DISCLOSURES BY LISTED AGRICULTURAL FIRMS IN NIGERIA
Get PDFThe study investigated the impact of some firm specific attributes on compliance with International Accounting Standard (IAS) 41 of all 5 listed agricultural firms in Nigeria from 2012 to 2019. The study used secondary source of data collected from annual reports published by the firms and the data was analyzed using multiple regression. Findings from the study showed that biological assets intensity and firm size are positively and significantly related to compliance with IAS 41 disclosures, while leverage is negatively and significantly related to compliance with IAS 41 disclosures. Based on the findings the study recommends that listed agricultural firms should increase their biological assets as this leads to increase in compliance with international accounting standard issued by IASB to enhance the value of the firms. The firms should also make their capital structure less geared with focus more on equity than debts as more leverage leads to decrease in compliance with the standard. Furthermore, as much as possible, firms should enlarge the size of their firms as this leads to higher level of compliance with IAS 41 disclosures
DIVIDEND PAYMENT AND EARNINGS QUALITY OF LISTED MANUFACTURING COMPANIES IN NIGERIA
Get PDFThe goal of this study was to ascertain the effect of dividend payments on the earnings quality of Nigerian publicly traded manufacturing firms. The robust generalised least square methodology was used to analyze data from the annual reports and financial statements of thirty-two (32) manufacturing firms listed on the Nigerian Stock Exchange from 2009 to 2018. The findings indicate that dividend paying status and dividend changes have significant positive effect on earnings quality. Dividend size has a negative effect on the earnings quality of listed manufacturing companies in Nigeria. Over the study period, dividend changes had a significant positive effect on earnings quality, but dividend persistence had no significant influence on the earnings quality. The study therefore recommends that Nigerian manufacturing companies should adopt a dividend payout strategy that includes paying cash dividends and maintaining a high level of earnings quality