Corporate Governance and Credit Risk Management: A Study of the Ngerian Financial Crisis

This paper examines corporate governance and credit risk management in Nigerian Banks, with the aim to determine the relationship that exists between corporate governance and credit risk management. Secondary data were gathered from 19 listed Nigerian banks for a 5 year period between 2005 and 2009; the post-consolidation to financial sector crash in Nigeria. Corporate governance is measured by statutory committee, committee independence, board size, board composition, executive duality and directors' interest; while credit risk management is measured by non-performing loans ratio, loan loss provision, and loan to deposit ratio. The data were analysed by Ordinary least square panel data analysis. Findings revealed that banks with good corporate governance have better credit risk management. Results of the hypotheses tests revealed that there is a significant relationship between corporate governance and the credit risk management variables: non-performing loans ratio; loan loss provision; and loans to deposits ratio. This paper recommends that directors of banks should ensure compliance with corporate governance policies since it would also improve the bank's management quality.