EFFECT OF BOARD SIZE AND BOARD COMPOSITION ON PROFITABILITY OF DEPOSIT MONEY BANKS IN NIGERIA

Abstract

Profitability is an important goal of deposit money banks and where they cannot make sufficient or no profit such banks are not able to cover various costs and survive in business because of their inability to meet maturing obligations. It leads to stunted growth because of unavailability of capital for expansion, research and development into modern technology. The objective of this study was to examine the effect of board size and board composition on profitability of deposit money banks in Nigeria. The research design was ex-post facto, and the population comprised of 29 DMBs listed on the Nigeria Exchange Group as at 31^st December 2022. The sample included 12 banks which were selected based on specified criteria and secondary data were extracted from the annual reports and accounts of the sampled DMBs. Preliminary tests such as Ramsey reset test, Breuch-pagan lagrange multiplier test, Unit root test, Normality test and Hausman test were carried out. Random effect regression was used to analyse the data. The result shows that board size and board composition have positive significant effect on profitability of deposit money banks in Nigeria. The study recommends that the boards of banks should be robust, strong and with vast experience capable of making independent and fair judgments about the bank’s problems aimed at improving profitability.