Academy of Accounting and Financial Studies Journal (Print ISSN: 1096-3685; Online ISSN: 1528-2635)

Abstract

Does Risk Governance Impact Bank Performance? Evidence From the Nigerian Banking Sector

Author(s): Olayinka Erin, Osariemen Asiriuwa, Paul Olojede, Opeyemi Ajetunmobi, Timothy Usman

This study investigates the impact of risk governance on the performance of money deposit banks in Nigeria. Eleven (11) banks were sampled out of fifteen (15) listed banks in Nigeria for the period of 2012 to 2016. Risk governance variables was proxy by presence of Chief Risk Officer (CRO_presence), Chief Risk Officer Centrality (CRO_centrality), Board Risk Committee Independence (BRC_independence), Board Risk Committee Activism (BRC_activism), Board of Director Independence (BOD_independence), and Enterprise Risk Management Score (ERM_score) while the study controlled for other variables such as firm size, board size, audit committee independence, cost to income ratio and loan. Bank performance was measured by return on assets (ROA). The empirical finding revealed that all the explanatory variables except CRO_centrality have a positive and significant impact on the performance of listed banks in Nigeria. The study recommends that the regulatory authorities (Central Bank of Nigeria, Financial Reporting Council of Nigeria, and Securities and Exchange Commission) should continue to ensure strict compliance regarding risk governance framework. Also, regulatory authorities should place more importance on the remuneration of CRO in order to further strengthen risk management practices in Nigerian banks. This study provides original insight into risk governance variables that affect the performance of money deposit banks in Nigeria. It carries significant importance for risk managers, bank executives, regulatory authorities, policymakers and future researchers.