THE IMPACT OF INTERNAL GOVERNANCE MECHANISMS AND RISK MANAGEMENT ON FINANCIAL INSTITUTIONS IN NIGERIA

ABSTRACT

Corporate governance mechanisms and regulations have been given a considerable attention worldwide as, they enhance the overall economic proficiency to achieve the overall public benefits of the individual and organizational stakeholders. This research paper seeks to examine whether Internal Governance Mechanism (Board Size, Board Independent and Board Meeting) influence the content of RMD in Financial institutions in Nigeria. The aim of this study is to assess the relationship between internal governance mechanism and risk management of listed financial institutions (FIs) in Nigeria. Specific objectives are to ascertain the effect of internal governance mechanism (Board size, board independence and board meetings) on Credit risk of listed financial institution in Nigeria. Determine the relationship between internal governance mechanism (Board size, board independence and board meetings) and Liquidity risk of listed financial institution in Nigeria. Examine the relationship between internal governance mechanism (Board size, board independence and board meetings) and Interest rate risk of listed financial institution in Nigeria. The study adopted ex-post facto research design because the study entails the use of annual report and accounts of the quoted financial institutions under study, the population of this study consists of some the quoted financial institutions in the Nigerian stock exchange as at 2017. The study covers a period of ten years between 2008 and 2017. Panel data analysis is employed to explore both cross-sectional and time series data simultaneously. Stata Version12.0 are used for the analysis. In our results liquidity risk is negatively significant to the ROA; it means that if liquidity risk increases, profitability decrease, further findings also suggest that liquidity risk is negatively associated with ROE. This research therefore, conclude that in financial sector Banks to be specific, non-performing loans / gross credits have positive effects on the financial performance (ROA; ROE) of banks.