ABSTRACT

The study is aimed at Evaluating the Impact of Corporate Governance on the Nigerian Banking Sector.

The two major objectives of the study were to evaluate the principles of corporate governance and to identify the challenges of corporate governance on the Nigerian banking sector.

Primary and secondary sources of data were used to obtain information for the study.  The questionnaire was designed in five point Likert scale format, in line with the objectives set out to achieve the study.

In calculating the sample size, the researcher applied the statistical formula for selecting from a finite population as formulated by Yamane.  The Chi-square (X²) statistical test method was used to test the hypotheses.

Findings indicate that the principles of corporate governance include role and responsibilities of the board, disclosure and transparency, rights and equitable treatment of shareholders and the challenges of corporate governance on the Nigerian banking sector includes technical incompetence of board and management, increased levels of risks, and inadequate management capacity.

Based on the findings, the study recommends that the central bank of Nigeria should put more efforts to establish or promulgate regulations which will enforce compliance to the principles of corporate governance by boards of the Nigerian banks and that efforts should be made to educate the Nigerian public especially the shareholders of banks on the place and need for corporate governance so that they can insist on it when they go for annual general meetings (AGM). 

TABLE OF CONTENTS

Title Page     —-     —–    ——  ——  ——  ——  ——            ii

Approval Page—-    —–    ——  ——  ——  ——  ——            iii

Certification Page– —–    ——  ——  ——  ——  ——            iv

Dedication—-         —–    ——  ——  ——  ——  ——            v

Acknowledgments——–   ——  ——  ——  ——- —–              vi

Abstract —-  —–    ——  ——  ——  ——  ——  —-               vii     

Table of Contents—-        —–    ——  ——  ——  ——            viii

List of Illustrations——–  —–    ——  ——  ——- ——            ix

List of Tables————–   —–    ——  ——- ——  ——            x

CHAPTER ONE: INTRODUCTION

1.1     Background of the Study————        ——  ——            1

1.2     Statement of the Problem—-       ——  ——  ——            2       

1.3     Objectives of the Study———— ——  ——  ——            3

1.4     Research Questions——    ——  ——  ——  ——            3

1.5     Research Hypotheses—— ——  ——  ——  ——            3

1.6     Scope of the Study——    ——  ——  ——  ——            4

1.7     Limitation of the Study——        ——  ——  ——            5

1.8     Significance of the Study——      ——  ——  ——            5

1.9     Definition of Terms——    ——  ——  ——  ——            5

          References   

CHAPTER TWO: REVIEW OF RELATED LITERATURE

2.1     Corporate Governance Generally Defined——  ——            7

2.2     Principles of Corporate Governance——————               8

2.3     Pillars of Corporate Governance———————–              10

2.4     Parties to Corporate Governance———————               10

2.5     Essence of Good Corporate Governance ————–            10

2.6     Extent of Corporate Governance Practices in             

          Nigerian Organizations ——————————-                11

• Duties/Responsibilities of Directors to improve                    

Corporate Governance———————————–             11

• Role of Good Corporate Governance on

Nigerian Banking Sector———————————             12

• Challenges of Corporate Governance in

Nigeria—————————————————–             13

2.10   Challenges of Corporate Governance for

Banks Post Consolidation——————————-             15     

2.11   Systemic Problems of Corporate Governance———             17

2.12   Prospects of Corporate Governance      

          On Nigerian Banking Sector——————————           18

• Corporate Governance Mechanisms and Controls—–            18
• The Regulatory Institutions for Nigerian Banks——-            20
• Need for a New Code of Corporate Governance——–          21

References

CHAPTER THREE: RESEARCH METHODOLOGY

• Introduction——————————————-                 24
• Sources of Data——————————————-             24
• Area of the Study—————————————–            24
• Population of the Study———————————             24
• Sample size Determination—————————–              25
• Instrument for Data Collection————————              27
• Method of Data Analysis———————————-           27
• Validity of the Instrument ——————————–          28
• Reliability of the Instrument ———————————-     28

References

CHAPTER FOUR: PRESENTATION AND ANALYSIS OF DATA

• Introduction—————————————–                    30
• Data Presentation and Analysis——————-                    30
• Testing of Hypotheses——————————                            34

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION

AND RECOMMENDATIONS

5.1     Summary of Findings ——————————–                 43

5.2     Conclusion———————————————                 44

5.3     Recommendations————————————-                44

BIBLIOGRAPHY

APPENDIX   

IST OF ILLUSTRATIONS

                                                                                                          Pages

• Questionnaire returned and not returned——————- 31

LIST OF TABLES

                                                                                                          Pages

3.4.1  Target Population for the Study————————————           26

3.5.1  Category of Staff—————————————————–           28

4.2.1  Sex Distribution of the Respondents——————————            31

4.2.2  Age Distribution of the Respondents——————————           32

4.2.3  Working Experience Distribution of the Respondents———–            32

4.2.4  Responses on the Principles of Corporate Governance———            33

4.2.5  Responses on the Challenges of Corporate Governance on   

          Nigerian Banking Sector———————————————           34

• Responses on the Prospects of Corporate Governance on

Nigerian Banking Sector———————————————–  34

• Responses on the Extent to which banks operate by Corporate

Governance—————————————————————35

4.3.1  First Hypothesis Testing: Calculation of Chi-Square values for 1^st

          hypothesis————————————————————-           36

• Second Hypothesis Testing: Calculation of Chi-Square values for

2^nd hypothesis———————————————————– 38

• Third Hypothesis Testing: Calculation of Chi-Square values for

3^rd hypothesis———————————————————            40

• Fourth Hypothesis Testing: Calculation of Chi-Square values for

4^th hypothesis————————————————————-42

CHAPTER ONE

INTRODUCTION

1.1                   BACKGROUND OF THE STUDY

Corporate governance is the set of processes, customs, policies, laws, and institutions affecting the way a corporation (or company) is directed, administered or controlled.  Corporate governance also includes the relationships among the many stakeholders involved and the goals for which the corporation is governed.  The principal stakeholders are the shareholders, management, and the board of directors.  Other stakeholders include employees, customers, creditors, suppliers, regulators, and the community at large (Wikipedia, 2010:1).

Corporate governance is a multi-faceted subject.  An important theme of corporate governance is to ensure the accountability of certain individuals in an organization through mechanisms that try to reduce or eliminate the principal-agent problem (Wikipedia, 2010:1).

It is incontrovertible that corporate governance is one of the most critical issues in the business world today.  There was a time when this topic would not have elicited much attention.  But, with episodic failures of many corporations, corporate governance has taken a central stage in business discuss and any intellectual gathering on business management (Oladimeji, 2007:1).

Corporate governance is also a system of structuring, operating and controlling a company, be it bank or non-bank, with a view towards attaining long term strategic goals to maximize shareholders wealth and satisfy other stakeholders, employees, depositors, suppliers, other customers, and other stakeholders (Phillips, 2007:7).

Corporate governance is concerned with improved stakeholder performance viewed from this perspective, corporate governance is all about accountability, boards, disclosure, investor involvement and related issues.  Research has shown that firms with stronger shareholder rights had higher firm value, higher profits, higher sales growth, lower capital expenditure and fewer corporate acquisition (Oladimeji, 2007:2).

Corporate governance is important for the survival of companies and indeed of national economies in the increasingly global economy. For transition economies, such as Nigeria’s which are faced with the double challenge of restructuring for greater efficiency and creating foreign investment-friendly environment, good corporate governance is crucial for success (Anyaoku, 2010:1).

The day-to-day operations of business have raised the need to install an appropriate frame work for ensuring transparency and accountability in the management of the business ventures.  Thus, the research topic, “Evaluating the Impact of Corporate Governance on Nigerian Banking Sector”.

1. STATEMENT OF THE PROBLEM