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This study investigates how various attributes of audit committees affect credit risk management in Nigerian banks.

July 11, 2026Open Access

Audit Committee Attributes on Credit Risk Management of Listed Deposit Money Banks in Nigeria.

SOSerah Uduak OdudohAkwa Ibom State University EUEno Dr. UkpongAkwa Ibom State University JUJoesph Prof. UdoayangUniversity of Calabar

Key Points

This study investigates how various attributes of audit committees affect credit risk management in Nigerian banks.
Ex post facto research design using secondary data from eleven listed banks and Central Bank of Nigeria reports (N=176).
Descriptive statistics, correlation analysis, and panel regression were utilized to analyze data, correcting for heteroscedasticity and autocorrelation.
Audit committee attributes examined include size, independence, financial expertise, meeting frequency, gender diversity, and overlapping membership.
Audit committee size and chairperson tenure negatively affected non-performing loans (improving credit risk management).
Financial expertise and independence positively impacted non-performing loans, increasing credit risk.
Frequency of meetings, gender diversity, and overlapping membership had no significant impact on loan quality.

Abstract

This study examined the effect of audit committee attributes on the credit risk management of listed deposit money banks in Nigeria over the period 2009–2024. Specifically, the study investigated the effect of audit committee size, audit committee independence, audit committee meeting frequency, audit committee financial expertise, audit committee chairperson tenure, audit committee gender diversity, and audit committee overlapping membership on credit risk management, measured by the non-performing loan ratio (NPLR). The study was anchored on Agency Theory and adopted an ex post facto research design. Secondary data were obtained from the published annual reports of the eleven (11) listed deposit money banks on the Nigerian Exchange Group and the Central Bank of Nigeria Statistical Bulletin, resulting in 176 firm-year observations. Data were analyzed using descriptive statistics, correlation analysis, and panel regression, while the Driscoll–Kraay standard error estimator was employed to correct for heteroscedasticity, autocorrelation, and cross-sectional dependence. Descriptive statistics showed that the average non-performing loan ratio was 6.976% (SD = 9.293), while the average audit committee size was 5.795 members (SD = 0.751), audit committee independence averaged 61.3% (SD = 0.216), and audit committee financial expertise averaged 2.672 members (SD = 1.217). The regression results revealed that audit committee size and chairperson tenure had significant negative effects on non-performing loans, indicating improved credit risk management. Conversely, audit committee independence and financial expertise had significant positive effects on non-performing loans, while audit committee meeting frequency, gender diversity, and overlapping membership exerted statistically insignificant effects. The study concluded that audit committee attributes exert differential effects on credit risk management and that compliance with governance regulations alone is insufficient to improve loan quality. The study recommends an optimal audit committee size, competency-based appointment of independent members, and greater emphasis on the quality of audit committee oversight to strengthen credit risk management and enhance the stability of the Nigerian banking sector

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