Influence of board composition on the financial performance of deposit money banks in Nigeria

Abstract

Board composition is of great importance in the stability of banks and in the operation of an economy to the financial system, as such, an understanding of the issues that promote their profitability is vital and fundamental to the firmness of deposit money banks in Nigeria. In the course of the study, the primary objectives of the study were to determine the extent to which board size influence financial performance of deposit money banks in Nigeria, evaluate the impact of Non-executive directors on the financial performance of deposit money banks in Nigeria, and to investigate the effect of board diversity on the financial performance of deposit money banks in Nigeria. Based on sample of five banks, secondary data were extracted from the annual financial reports of the selected banks. The study adopted the ex-post facto design. The method of data analysis was the linear regression with the application of the ordinary least squares (OLS) techniques using E-view version. Findings revealed that board size had significant positive effect on the financial performance of selected money deposit banks in Nigeria, Non-Executive directors has no significant positive effect on the financial performance of selected money deposit banks in Nigeria, and Board Diversity has significant association on the financial performance of deposit money bank in Nigeria. Based on the findings, the study recommended, amongst others, that deposit money banks should increase the size of the board especially by electing more foreign directors and female who could bring diverse experience and expertise which the domestic directors may not possess.