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.

Keywords: Bank Asset Quality, Corporate Governance, Credit Committee, GMM, Non-Performing Loans, Nigeria.

JEL Classification: G21, G24, G33, G34.

Cite as: Karaye, A.I., Ahmad-Zaluki, N.A., Badru, B.O. (2022). The Effect of Credit Committee Characteristics on Bank Asset Quality in Nigeria. Financial Markets, Institutions and Risks, 6(2), 60-74. https://doi.org/10.21272/fmir.6(2).60-74.2022

This work is licensed under a Creative Commons Attribution 4.0 International License

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