Code of Ethics and Professionalism: Implication for Bank Failure in Nigeria

Abstract

The objective of this study is to undertake empirical investigation into the various causes of Bank failure with particular emphasis on the need to enforce compliance by Banks with the Banking Code of Ethics and Professionalism (BCEP), in order to achieve standardized and efficient banking environment. This stems from the fact that banking failure in Nigeria had become increasingly worrisome to all stakeholders. This study employed a well-structured questionnaire administered to staffers of selected banks located in Ogun and Lagos states environs, to obtain first hand data. One hundred [100] questionnaires were administered, out of which 79 were retrieved and analyzed. The analysis of data and the test of hypotheses was based on the use of the Pearson’s Moment Correlation Co-efficient, which showed a significant evidence that majority of banks in Nigeria, however, did not fail due to lack of adherence to ethical practices but mostly due to other factors, such as insider’s abuse on lending; lending to high risk borrowers; micro-economic instability; deficiency in bank regulation and supervision. The paper recommended legal enforcement and strict sanctions to ensure mandatory adherence to ethical and professional practices in the banks.

Keywords: Code of Ethics; Professionalism; Banking Distress; Mismanagement