Dept of Banking and Finance, Faculty of Management Sciences, University of Benin, Benin City, Nigeria; Department of Business Administration, Faculty of Management Sciences, Olabisi Onabanjo University, Ago-Iwoye, Nigeria
Osamwonyi, I.O., Dept of Banking and Finance, Faculty of Management Sciences, University of Benin, Benin City, Nigeria; Abosede, A.J., Department of Business Administration, Faculty of Management Sciences, Olabisi Onabanjo University, Ago-Iwoye, Nigeria
Banking sector performance in Nigeria has exhibited high level of volatility and fragility with the resultant individual and systemic distress which brought about wide ranging reforms. No doubt the actions and inactions of managers of banks and the inclement nature of the socio-economic environment could have accounted for the unpleasant results. The Central Bank of Nigeria indicted management of banks for insider abuses, subprime assets and inadequate provision. This study relying on Klitgaard (1996) model uses bad debts and operating expenses as proxies examines how circumvention of best practices may have affected banking activities in Nigeria. The study shows positive correlation among gross income, bad debts, loans and advances and operating expenses, though not significant. The significant intercept suggests other factors, and given current revelations they could be creative accounting and circumvention of best practices [despite the window dressing using incomes from non-interest activities and inadequate provision for doubtful debts]. Government should therefore intensify and/or redefine its intervention strategies through improved supervision and insistence on good corporate governance instead of focusing on only recapitalization. © EuroJournals, Inc. 2012.
