Impact of Corporate Governance Mechanisms on Asset Quality of Selected Deposit Money Banks in Nigeria

Abstract

Good corporate governance practice is required for effective management of organizational resources and in the banking industry in particulars. Long after the initiative of CBN introducing corporate governance code following the consolidation exercise in 2005, efforts aimed at improving corporate governance practice in Nigerian banking industry has not yield the desired result. It is against this backdrop that the study examines the impact of corporate governance mechanisms on the asset quality of selected deposit money banks in Nigeria for a period of ten (10) years. Data for the study were quantitatively generated as retrieved from the annual financial reports and accounts of some selected deposit money banks in Nigeria. Data was analysed using regression analysis and it was discovered that audit committee and board composition contributes positively and significantly to assets quality of the deposit money banks in Nigeria. The study however, recommends among others that more efforts should be made to ensure adequate compliance to the reforms and to adhere to corporate governance principles, as well as its attractiveness and effectiveness towards improving performance.