Internal Governance Mechanisms and Risk Management Strategy of Listed Deposits Money Banks in Nigeria

Abstract

This study examines the impact of corporate governance mechanism on risk management of listed deposits money banks that are listed on the Nigeria Stock Exchange for the period 2011-2021. With respect to methodology, the study adopted ex-post facto research design because the study entails the use of annual report and accounts of the quoted deposits money Banks under study. In this study secondary data were used. The population of the study comprises of all the deposits money banks in Nigeria in which a sample of only the quoted deposits money Banks in the Nigerian stock exchange were used as at 31^st December 2021. The study covers a period of ten years between 2011 and 2021. Panel data analysis was employed adopting the Random-effect GLS regression technique to analyze data which were in time series simultaneously. The hypotheses were analysed and tested using Stata Version 12. The finding of the study reveals that board independence has positive impact on credit risk and liquidity risk. Board independence is also negatively significant to the capital risk in Nigeria. Regarding gender diversity, the study found that there is a positive relationship of GDB with capital risk, credit risk, and also positively significant to liquidity risk. Further findings equally suggest that there is a positive and significant impact of GDB with capital risk, credit risk, and also positively significant to liquidity risk. In line with the findings, this research therefore, concludes that companies must also be individually involved in risk management responsibilities otherwise; banks may have a low reputation, low profits, and low resources. Base on the conclusion above, this study recommends that, on the board size banks should maintain relatively small board size dominated by outside directors within the provisions of the code of corporate governance for banks but the board should comprise of members, who are conversant with oversight function and having capacity to analyzed risk as well as to add significant value in decision making toward achieving greater performance.