Effect of Board Characteristics on the Financial Performance of Deposit Money Banks in Nigeria

Abstract

The financial performance of Nigerian deposit money banks (DMBs) has been a subject of concern, particularly in light of past banking crises attributed to poor corporate governance. This study aims to investigate the effect of board characteristics on the financial performance of these banks. Specifically, the study explores how factors such as board size, board independence, board gender diversity, and board meeting frequency influence financial performance, measured by Return on Equity (ROE). Using secondary data from 10 selected banks over a period from 2015 to 2025, the study employs a quantitative research methodology, utilizing E-VIEW 9.0 software to perform descriptive statistics, correlation analysis, and multiple regression analysis. The findings reveal that board size, board independence, and board gender diversity positively affect financial performance, suggesting that boards with greater diversity and independence contribute to better decision-making and improved performance. However, the study also uncovers a negative relationship between board meeting frequency and financial performance, indicating that more frequent meetings may not always enhance performance and could signal inefficiency in governance. The study recommends that Nigerian banks focus on optimizing board size, ensuring sufficient diversity and independence, and promoting gender diversity at the board level. Furthermore, the study suggests that banks should prioritize the quality of board meetings over their frequency, ensuring that meetings are well-structured and focused on strategic decision making. These measures could contribute to better corporate governance and improved financial outcomes for Nigerian DMBs.