BANKING, SHAREHOLDERS’ EQUITY RETURNS AND CORRUPTION PERCEPTION IN NIGERIA

Abstract

The research examined how CPI affects the return on equity of the shareholders of DMBs in Nigeria from 1996 to 2022 using the Error Correction technique. The ECM outputs indicate that CPI, total deposits of DMBs, and NPLs of DMBs significantly impede the ROE of banks in the country. Consequently, the study concludes that corruption perception is a negative significant determinant of the return on equity of DMBs in Nigeria. The study affirms the "sand-the-wheel hypothesis," which posits that corruption impedes corporate and economic performance. Based on these findings, the study recommends the need for the apex regulator, the Central Bank of Nigeria (CBN) and anti-corruption agencies to ensure strict enforcement of existing legal frameworks in combating corruption in the country. The study also recommends the need to institute internal control measures to cover gaps and combat corrupt practices before they arise. This will help ensure transparency and a more conducive business climate, promote confidence, and help boost the performance of DMBs in Nigeria.