APPRAISAL OF NIGERIAN BANKS COMPLIANCE WITH THE CENTRAL BANK OF NIGERIA CODE OF CORPORATE GOVERNANCE AND ITS EFFECT ON BANK PERFORMANCE

Abstract

The study appraised Nigerian banks’ compliance with the Central Bank of Nigeria Code of Corporate Governance as well as its effect on banks’ performance. The specific objectives considered are: to determine the extent to which commercial banks in Nigeria complied and Evaluate the effect of banks’ compliance with the Central bank of Nigeria’s code of corporate governance. The study adopts a secondary source of data. The data were analyzed using, analysis of variance (ANOVA) to measure Nigerian banks’ compliance with the CBN code of corporate governance, while the panel data ordinary least square regression to measure the compliance effect on the bank’s profitability. The result revealed that Nigerian commercial banks’ compliance with CBN best practices for board size was statistically insignificant. In conclusion, Compliance with the Central Bank of Nigeria’s code of corporate governance significantly impacted banks’ profitability in Nigeria. CBN code of corporate governance raises the profitability of Nigerian banks by 3.53 percent. It was recommended that the Central Bank of Nigeria should strictly monitor Nigerian banks’ compliance with the code of corporate governance, especially board size, audit committee, board diversity, and power separation, as a percentage increase in general compliance to the best practice.