The Effect Of Good Corporate Governance In The Banking Industry
1.1 Background of the Study
In a situation where power is used to direct control and regulate activities that effects peoples interest there is the need in exercised such power with good intention.
For corporate activities, particularly public limited companies the exercise of power over the enterprises directions the supervision and control of executive action is concerned with the enterprises on their parties, especially the environment. The acceptance of a judiciary of corporate governance. This has been widely event driven in the sense that is in response to scandals and unexpected cries which in some case abstractly terminated the existence of large corporate entities. The failure of Johnson banks or credit and commerce international saving bank Euro Corporation Polly pick are cases at this point. The failures of these institution have been traced back to school lapses associate with poor corporate governance include conflict of interest of corporate governance. The concern also concedes with the implementation of liberalization de-regulation and privatilization polities. Particularly in transaction economics. It also shifts the authorities for allocation resources and return including social benefit and externalities with forms from public to private sector actors.
However, the concern with defines the scope of his research work is that of corporate governance in Nigeria banks as widely acknowledgement in the literature banks play a vital role in promotion economic growth and development of modern nation starter as noted by Schumper (1934) as a key agent in the process of development.
As financial intermediaries they are pivotal agent in payment to the real sector. They also act as catalyst for economy growth and development.
The findings of various investigation into the remote and immediate cause of recent bank failure in Nigeria narrow the problem down to two broad group namely: macroeconomic and micro economic which are respectively exogenous and endogenous to the effect failed of the CBN/HDIC collaborate study conducted in 1995 or distress in the Nigerian financial sectors industry was that the endogenous factors were the most profound of all the subsequent failure of some of them. Many banks that were distressed attributed to poor condition largely to endogenous factor which included undue interference from broad number in management and bad credit policy (CBN/NDIV 1995) presence of serious corporate governance in the banking sector. Efforts have been taken for motivated sanitation of the deregulation authorities which has been deployed to contain the problem of distress banks. The under lending manifestation of the corporate governance problem in the nation banking sector in the motivation of the research work to examine the effect of good nation corporate government in the banking industry in Nigeria.
The importance of effective good corporate governance in the corporate and economics performance cannot be over emphasized into days of global market place companies perceived as adopting international but to attract international investor that those whose practice are not perceived to be international standard.
It can also be said that crises witnessed in the Nigeria financial system especially in the nineties could essentially be linked to non-compliance with the principle of good corporate banking sector in the area good corporate governance it’s on this development and needs of corporate entity to adopt good corporate governance.
1.2 Statement of the Problems
Also with these researchers intend to put in brief the problem of non- compliance with the corporate governance rules and regulations and how this problem can be solved in due course effect have been made to find solution in the following problems.
- How can a corporate entity discharge corporate governance through it functions?
- In what way will the corporate entity gives the explicit procedure on what is to be done.
- How can corporate entities balance of power with which the organization is directed, supervised and held accountable.
- How the researches can described and interest statistics presentation, interpretation analysis the data gathered through the questionnaire and annual report.
1.3 Research Questions
The focus of this study is to identify the effect of god corporate governance in the Nigeria banking industry. Hence in the course of this study, effort has been made to find solution to the following research questions
- What are the overviews of corporate governance?
- What are the principles of corporate governance?
- How does the ethical issue arise in corporate governance?
- Why the need for financial reporting and good corporate governance?
- What are the important of corporate governance?
- What are the benefits of corporate governance?
- How does the corporate governance arise in an organization?
- Discuss the corporate governance in the Nigerian banking industry?
1.4 Aims and Objectives of the Study
This study has to examine the effect of good corporate governance in the banking industry. The aims and objectives of the study are:
- To examine the overviews of corporate governance.
- To highlight the principal talent of corporate governance
- To know the ethic issues in corporate governance
- To know the need for financial reporting and good corporate governance
- To enumerate the important of good corporate governance
- To analyze the code of corporate governance in an organization.
1.5 Research Hypothesis
Hypothesis is a statement of belief regarding a phenomenon, fact or relationship among various variable. Hypothesis is always tasted against facts before it is accepted or rejected.
There are two types of hypothesis.
- Null hypothesis: it is tested for rejection or acceptable depending on the sampling experience it is donated by Ho
- Alternative hypothesis: this represents the hypothesis or statement to taken as true when null hypothesis (Ho) is false, that is rejected, this represent acceptance only if the data provided convincing evidence of its truth it id donate (HI)
Null hypothesis (Ho) tested in this project is as follows
- Ho corporate governance does not enable the banks to meet up with the depositor demand.
- Hi corporate governance prevents the expectation of the investor and manager.
1.6 Significant and Justification of the Study
The following categories of people will benefit from this research work.
It enables the bank to perform toward the expectation of regulatory bodies and representing the interest of stakeholders in good manner stewarding and bring back good confidence to the banking activities.
The demand for the bank services by the customer both accordance with rules and regulation.
1.7 Definition of Key Terms
The research has considered if necessary to define the following term in order to facilitate understanding of this work by the reader.
Is concerned with effective leadership of entities to ensure they deliver on their deliver on their promises as the wealth creating organ society and they do as in a sustainable manner.
A company that belongs to or is connected with a business and operates under policies guiding the activities of the company (CAMA)
A bank is a corporate or person who accepts money on accounts pay cheques on such account and collected for customer.
5.1 Finding, Summary and Recommendations
This project work justifies the effect of good corporate governance in relation to banking industry in Nigeria contest. If there is any subsequent research the following area are need to be examined.
- The challenges of good corporate governance in the banking industry
- Relationship between financial reporting of good corporate governance and information disclosure requirements.
Corporate governance involves the balance of power with the organization is directed, supervised and held accountable. The basic theme of this research was to analyzed the conceptual of feasible framework for good corporate governance in the Nigeria banking system with a view to identifying the interest challenges the offering feasible suggestion effective banking of power to govern the organization.
The belief system of cultural norm, public policy and quality of political governance of any society will influence the direction, practice and quality of good corporate governance. Hence, it should not be surprising that in spite of the legal and statutory provision the history culture and norm of the Nigeria. Society have collectively programmed the minds and behavior of directors both at which impinge negative on the practice of good corporate governance in our banks.
This project highlighted the major element that promote responsible corporate in banks which include corporate structures of management, management information system legal framework, internal control and regulation for banks transparency to be meaningful information.
Ownership that is concentrated in the hands of a few outsiders appears to result in more effective governance particularly in legal and relations environment life ours that offer little protection for shareholders and credit rights.
The regulatory authorities place a high premium on the existence of effective internal control system that are consistent with the nature complexity and risks inherent in their operation on the parts bank supervision regulators must possess adequate skills for auditing financial statements in the organization. They should also have the ability of not only to avoid around but also through the computers.
To promote responsive and effectiveness corporate governance in bank timely and adequate deregulatory/ supervisory intervention including the imposition of section and the prompt liquidity of terminating distressed banks in imperative.
It can be said that the crisis witness in the Nigeria financial system especially in the main teens could be essentially linked to non- compliance with the sound management, it also especially the banking sectors in the area of good corporate governance.
The importance of good corporate governance to our financial institutions cannot ne over emphasized especially with the credit dwelling image of Nigeria banks preparation and public perception are key propellers of good corporate governance practice in scoring investment and image of the country in its corporate entities which will be solved.
Banks and all corporate entities are therefore ought to put in place adequate machinery for effective internal control, internal audit, risk management and sound reporting practice which are essential component of good corporate governance all level are. The major ingredients at all levels are transparency observation of the rules and regulation guidelines, clean corporate practice equity and fairness as well as enhancing the corporate image of the organization in the eyes of the public.
Therefore in view of the enumerated problems and effect of good corporate governance the following are recommendations to the highlighted problems and findings.
- The banks should ensure equitable treatment of shareholders
- Also banks should ensure the base for an effective governance framework.
- The rights of stakeholders and key ownership function must be ensuring.
- Transparency and disclosure must be watch word of the banks.
- The responsibility of the board must be spell out.
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