The Effect of Credit Committee Characteristics on Bank Asset Quality in Nigeria
Journal: Financial Markets, Institutions and Risks (FMIR) (Vol.6, No. 2)Publication Date: 2022-30-06
Authors : Abubakar Ibrahim Karaye Nurwati A. Ahmad-Zaluki Bazeet Olayemi Badru;
Page : 60-74
Keywords : Bank Asset Quality; Corporate Governance; Credit Committee; GMM; Non-Performing Loans; Nigeria.;
Abstract
This study aims to evaluate the effect of credit committee characteristics on bank asset quality in Nigeria. The paper examines the credit committee characteristics namely: credit committee independence, credit committee non-executive directors, credit committee size, credit committee meetings, credit committee gender, credit committee expertise, credit committee chair-gender, credit committee chair-independence and chief executive officer in credit committee, and their influence on non-performing loans. Descriptive research design is used on a sample consisting of 18 commercial banks in Nigeria. Secondary data is obtained from the published annual reports covering thirteen (13) years period (2006-2018). Data analysis involved Correlation Coefficient, Multiple Regression Analysis and Dynamic Panel Model estimations using Generalize Method of Moments. The study finds that credit committee independence and credit committee size have a significant negative relation while credit committee gender, credit committee meetings, credit committee chair-independence, and presence of chief executive officer in credit committee have a significant positive relation with non-performing loans. The study therefore recommends that, policymakers and bank executives in Nigeria should concentrate their efforts on the characteristics of credit committee as a whole, rather than on a few elements that have been scientifically demonstrated to have an impact on bank asset quality. This may likely enhance the quality of bank assets.
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