Corporate Governance and Profitability of Nigerian Banks

The Nigerian banking environment is a vibrant and challenging financial environment and is endemic with systemic governance problems, capacity constraints and defaulting in compliance and implementation of laws which has inhibited economic growth. Therefore the current investigation focuses on association between organizational governance and profitability of deposits money banks in Nigeria. Three indicators of corporate governance mechanism (board composition, board size and directors’ interests) were incorporated in the study. Relevant information was extracted from audited financial statements of the selected banks. The results of the regression analysis revealed the existence of positive but non-statistically significant association between board composition and profitability on one hand; and board size and profitability on the other hand. However, a non beneficial and non-significant association exists between directors’ interests and profitability in the Nigerian banks. Based on the findings of the study, the study recommends that in order to prevent distress in the banking sector, there should be a regular review of the corporate governance codes so as to reflect current social, environmental, technological and economic situations.