Corporate Governance and Organizational Performance in the Nigerian Banking Industry

Abstract

The concept of corporate governance emerged in response to the failures and widespread dissatisfaction with the way corporate organizations function. The Banking reforms in Nigeria brought about the consolidation of banks and based on exploratory analysis, it was found that in the presence of several regulations, weak corporate governance was a contributing factor to the poor performance underlying the subprime crisis in the Nigerian baking sector. In Nigeria It is evidential that banks strongly influence economic development and the efficient allocation of funds resulting in a lower cost of capital to firms, a boost in capital formations, and an increase in overall productivity. Consequently, the passing of various acts which deregulated the banking industry heightened the importance of internal regulatory mechanisms of banks such as corporate governance. In particular corporate governance is expected to affect bank’s valuation, cost of capital, performance and risk taking behaviour. Given the importance of the industry, there is a need to safeguard depositors’ funds and shareholders investments through a continuous entrenchment of sound and effective corporate governance regime within the banking sector.

Keywords: Corporate governance, Organizational performance, stakeholders, Banking Industry, Nigeria.