Top Management Attributes and Asset Quality of Listed Deposit Money Banks in Nigeria

This study examined the effect of top management attributes on the asset quality of listed deposit money banks in Nigeria from 2015 to 2024. Anchored on the Upper Echelon Theory, Resource-Based View, and Institutional Theory, the study operationalized five proxies of top management attributes: financial expertise, interlocking membership, educational qualification, nationality, and gender diversity. The asset quality was measured the ratio of nonperforming loans to total assets. Secondary data were extracted from the annual reports of all seven deposit money banks with international authorization and listed on the Nigerian Exchange Group (NGX). A census sampling technique yielded a balanced panel dataset of 70 firm-year observations. Pooled ordinary least squares (OLS) regression with robust standard errors was used for estimation using STATA 17. Diagnostic tests confirmed the absence of multicollinearity (mean variance index (VIF) = 1.23) and validated the pooled OLS estimator as the appropriate model specification (Lagrange multiplier test: p = 0.465). The results indicated that top management financial expertise (β = −0.255; p = 0.034) and interlocking membership (β = −0.182; p = 0.022) exerted statistically significant negative effects on NPLs. Gender diversity also significantly reduced nonperforming loans (β = −0.247; p = 0.040). In contrast, educational qualification (β = −0.011; p = 0.765) and nationality (β = 0.020; p = 0.535) had no statistically significant effects. The overall model was statistically significant (F = 11.005; p = 0.003), explaining 33.3% of the nonperforming loan variation. The study concluded that competent, well-networked, and gender-diverse top management teams contribute to Nigerian banks’ improved asset quality. It recommends that regulatory authorities and bank boards prioritize the appointment of financial expert managers, encourage responsible interlocking directorships, and actively promote gender inclusivity at the top management level to strengthen credit risk oversight and curtail loan defaults.