The Effect of Corporate Governance on the Profitability of Money Deposit Banks in Nigeria

Abstract

This study examined the effect of corporate governance on the profitability level of money deposit banks in Nigeria. The specific objectives were to investigate the impact of board independence on the profitability of money deposit banks in Nigeria and examine the extent to which audit committee effectiveness influences the profitability of money deposit banks in Nigeria. Relevant conceptual, empirical and theoretical literatures were reviewed. The study is anchored on Agency theory. This study adopted an Ex-Post Facto and a descriptive survey research design, both primary and secondary data were collected and analysed using both descriptive and inferential statistics. The findings revealed that independent boards foster better governance practices, positively impacting profitability. The findings also showed that the effectiveness of audit committees plays a crucial role in enhancing the financial performance of money deposit banks, underscoring the importance of robust audit practices in promoting transparency, accountability, and sustainable profitability in the banking sector. The study concluded that there is significant impact of corporate governance on the profitability level of money deposit banks in Nigeria. Board independence enhances decision-making quality, governance, and accountability, leading to improved profitability. Effective audit committees strengthen financial reporting, risk management, and stakeholder trust, supporting sustainable profitability. To strengthen the profitability of money deposit banks in Nigeria, it is recommended that banks prioritize board independence and to enhance the oversight function of audit committees, banks should formulate transparent and effective audit processes.