Original Research Article | OPEN ACCESS
Credit Risk and Financial Performance of Banks in Nigeria: Moderating Effect of Board Equity Ownership

Nuraddeen Shehu Aliyu1 , Mu’azu Saidu Badara2 , Sanni Olawale Nurudeen3

1Department of Accounting, ABU Business School, Ahmadu Bello University, Nigeria.

For correspondence:-  Nuraddeen Aliyu   Email: nsaliyu@abu.edu.ng

Received: March 20 2022        Accepted: June 04 2022        Published: June 07 2022

Citation: Aliyu NS, Badara MS, Nurudeen SO. Credit Risk and Financial Performance of Banks in Nigeria: Moderating Effect of Board Equity Ownership. Account Tax Rev 2022; 6(2):1-13 doi:

© 2022 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..

Abstract

This study examined the moderating effect of board equity ownership on the relationship between credit risk and financial performance of listed deposit money banks in Nigeria for the period 2013-to 2020. The study used a correlational research design. Data were collected from the published annual financial reports of listed deposit money banks in Nigeria. The population of the study comprised the 14 listed deposit money banks. The adjusted population of twelve (13) listed deposit money banks in Nigeria was arrived at using three points filter. Integrated theory and financial distress theory were used to underpin the study. The data were analyzed with the aid of random effect multiple regression techniques, the result of the random effect regression shows that there is a positive and significant relationship between board equity ownership and financial performance of listed deposit money banks in Nigeria. However, a negative significant relationship was found between credit risk and financial performance. In addition, the study found that board equity ownership had a positive and significant moderating effect on the relationship between credit risk. It is recommended that listed deposit money bank management improve their credit analysis and loan administration capabilities. It is necessary to develop clear credit standards and lending criteria. Regulatory authorities should support board equity participation, according to the findings of the research, with a caveat to avoid interest concentration of power that might lead to abuse.

Keywords: board equity ownership, credit risk, financial performance, firm size, total assets


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