Ethical Challenges and Financial Performance in the Nigerian Banking Sector

Abstract

This study examines ethical challenges and financial performance in the Nigerian banking sector. In the presence of the acclaimed sound corporate governance by most banks which ought to promote good ethical practices, bank’s customers continue to express dissatisfactory banking services rendered, mostly observed in areas where unwarranted deductions (debits) are made to customer’s account without detailed explanations. Also, the degree to which most individual and corporate customers change their banking services due to loss of confidence, and the level of insider related credit granting have called for concern to examine some practices in this industry. Further, the dearth of research work in this particular area of interest has motivated this study. Percentage analysis, Descriptive statistics and Spearman ranked order of correlation (rho) using Statistical package for social sciences (SPSS 21.0) were used to analyze the responses from the various respondents. Findings from the empirical result indicates that insider related credits exhibit a significant positive relationship with financial performance in the Nigerian banking sector while unauthorized tampering with customers’ accounts revealed unexpected insignificant negative relationship with financial performance. It is therefore recommended that the Central Bank of Nigeria should instill tougher disciplinary measures against erring CEOs as this could go a long way to further mitigate the rising tide of unethical practices in the Nigerian banking sector.

Keywords: Unethical practices, Insider credits, financial performance and unauthorized access to customers’ accounts.