Corporate Governance Mechanism and Bank Performance, New Insights from Emerging Economy: Evidence from Nigeria Banking Sector

We investigated the relationship between corporate governance mechanisms and bank performance in the Nigerian banking sector. We focused on data from 2012 to 2022 extracted from the balance sheets of deposit money banks in Nigeria. We employed the Generalized Method of Moments (GMM) with Stata 13 and Python library to analyze the data. The research underscores the positive influence of non-executive directors and effective credit risk management on risk-adjusted return on assets in the Nigerian banking sector. Conversely, larger board sizes and higher levels of independence negatively impact performance. Notably, corporate governance variables do not significantly determine risk-adjusted return on equity, except for a negative association with lending rates. Practical implications include advocating for non-executive directors, optimizing board size and prioritizing robust credit risk management for enhanced financial outcomes. This research contributes to understanding the crucial role of corporate governance in the Nigerian banking sector, emphasizing its significance for prudent risk management and stakeholder confidence.