Relevance of Corporate Governance in Nigerian Banks

Abstract

This paper examines the relevance of Corporate Governance in Nigerian Banks. Although corporate governance is of general interests to the Nigerian public, that of the banking industry is of particular interest because of the published figures, attributes and activities of the banking institutions. Because every economy world-over has migrated to a ``money and exchange'' economy, the basic instrument to facilitate exchange and lubricate international trade is money. Due to the catalytic roles of banks in any economy, their corporate governance is of prime interest to government, depositors, shareholders and the public at large. The study became necessary as a result of recent events both globally and locally in which we witnessed massive failure of large companies, including banks, which have been mainly attributed to fraud and mismanagement by Directors and Managers of such Companies. The study employed the secondary source of data on corporate governance and its application in Nigerian banks. The study revealed that poor corporate governance, poor risk management practices, inability to manage expansion, low assets quality, inadequate supervisory framework and unethical practices among top banking chiefs who gave out loans without required collateral were identified as some of the reasons for the current financial crisis in the country. The key recommendation is that the banks should be made to provide a certain minimum amount of information requirement on corporate governance.

Keywords: Fraud, Mismanagement, Directors and Banks

International Journal of Development and Management Review (INJODEMAR) Vol. 7 June, 2012