EFFECT OF RISK COMMITTEE DIVERSITY ON FINANCIAL PERFORMANCE OF LICENSED DEPOSIT MONEY BANKS IN SELECTED SUB SAHARAN AFRICAN COUNTRIES
Keywords:
Financial Performance, Risk Committer Gender diversity, Risk Committee Independence diversity, Risk Committee Tenure diversity, Sub Saharan Africa, Total Assets.Abstract
This study investigated the effect of risk committee diversity on financial performance of licensed deposit money banks in selected sub saharan African countries. In specific terms, it investigated the effects of risk committee independence diversity, risk committee gender diversity, and risk committee tenure diversity on total assets of selected commercial banks in Nigeria, Ghana and South Africa. Adopting the ex post facto research design, a total of 12 commercial banks out of 29 commercial banks with license for international operations in Nigeria, Ghana and South Africa was judgmentally sampled for the years 2014 – 2024. Data extracts from the audited financial reports of the sampled commercial banks were analysed for test of hypotheses purpose using the panel least square statistical tool through STATA ver 17 statistical software. The findings showed that board risk management committee independence diversity has a positive but non-significant effect on the return of assets of commercial banks in Sub-Saharan Africa (t-statistic 0.97; p-value 0.335); board risk management committee gender diversity has a positive but very weak insignificant effect on the return of assets of commercial banks in Sub-Saharan Africa (t-statistic 0.04; p-value 0.967); and board risk management committee tenure diversity has a strong and positive significant effect on the return of assets of commercial banks in Sub-Saharan Africa (t-statistics 2.03; p-value 0.045). The study concluded that deep-level diversity attributes especially tenure structure plays a more meaningful role in strengthening the performance of commercial banks in the sub Saharan Africa. It therefore recommends that Banks should improve board independence by adopting stricter conflict-of-interest policies, ensuring independent directors have full access to risk information, and reducing practices that limit independent oversight. Also, banks should ensure that gender-diverse appointees are assigned meaningful functional roles within BRMCs rather than symbolic positions. Lastly, commercial banks should therefore adopt staggered board renewal policies, ensuring a mix of long-serving and newly appointed directors in BRMCs to facilitate knowledge continuity and fresh perspectives.
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