Original Research Article | OPEN ACCESS
Litigation Infraction Charges andFinancial Performanceof Deposit Money Banks in Nigeria

Chinazu Akonye1 Sunday C, Okaro2 Emma I. Okoye3

Department of Accountancy, Nnamdi Azikiwe University Awka, Nigeria;

For correspondence:-  Chinazu Akonye   Email: akonyechinazu@gmail.com

Received: May 17, 2020        Accepted: June 19, 2020        Published: 26 June 2020

Citation: Akonye C.Okaro SC.Okoye EI. Litigation Infraction Charges andFinancial Performanceof Deposit Money Banks in Nigeria. Account Tax Rev 2020; 4(2):117-133 doi:

© 2020 The authors.
This is an Open Access article that uses a funding model which does not charge readers or their institutions for access and distributed under the terms of the Creative Commons Attribution License (http://creativecommons.org/licenses/by/4.0) and the Budapest Open Access Initiative (http://www.budapestopenaccessinitiative.org/read), which permit unrestricted use, distribution, and reproduction in any medium, provided the original work is properly credited..


This study investigated the effect of litigationinfraction charges (LICs)arising fromthe settlement of legal violations of agreed terms and conditions banking transactions with counterparties on the financial performance of Deposit Money Banks (DMBs) in Nigeria. Litigation Infraction Charges for DMBs comprises ofLegal Professional Charges (LPCs) and court-imposed Charges (CICs).The specific objectives of this study are to ascertain; firstly, the effect of Legal Professional Charges (LPCs) on the financial performance of DMBs in Nigeria and secondly, the effect of Court-Imposed Charges (CICs)on the financial performance of DMBs in Nigeria. The study adopted the ex-post facto research design.  This study made use of secondary data obtained from the Nigerian Stock Exchange factbooks, and Annual reports & accounts of the eight (8) sampled DMBs for its analysis. Purposive sampling technique was adopted to selecteight (8) Domestic Systemically Important Banks (D-SIBs) according to the Central Bank of Nigeria (CBN) 2014 ranking for banks in Nigeria.The population consists of sixteen (16) DMBs whose shares were listed on the Nigerian Stock Exchange as at December 31, 2018. This study made use of Panel Least Square (PLS) regression analysis with the aid of E-View 9.0 statistical software. The results of the regression analyses showed that legal Professional Charges (LPCs), and court-imposed Charges (CICs) eachhas a significantnegative influence on return on Equityof DMBs in Nigeria.The study recommends that deposit money banks should always abide by allterms, conditions and transaction dynamics agreed on terms with customers and counterparties. This willminimise substantial litigation infraction charges awarded to counterparties on legal violation settlements which affect the DMBs’ financial performance.Also, deposit money banks should incorporate Alternative Dispute Resolution (ADR) in their transaction contract documents and also explore ADR option, which is cheaper than court legal proceedings.

Keywords: Litigation, Professional charges, Court-imposed charges, Domestic systemically important banks, Alternative dispute resolution.

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