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Submitted
March 31, 2023
Accepted
June 24, 2023
Published
June 29, 2023
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Abstract

The study investigated the effect of compliance costs on the financial performance of deposit money banks in Nigeria. The variables comprising compliance costs are audit fees, AMCON fees, insurance costs, pension contribution costs, and professional fees. Fourteen listed banks on the Nigerian exchange group were considered for the study. The study period covered between 2012-2021 financial years, the period of upward integration in the banking sector. To test the stated hypothesis, a unit root test was conducted to determine the stationarity of the variables under study, and the variables were cointegrated at 1(1). We estimated the regression using a vector error correction model. The findings revealed that the Log of compliance cost (COC) exhibited a long-run relationship with the Log of return on assets (ROA), and Granger causality also flowed from Log COC to Log ROA. Among other things, it was suggested that managers and corporate boards of deposit money banks should be proactive in ensuring compliance with regulations and internal policies of banks with less financial commitment to earnings and returns to improve bank performance.

Keywords

Compliance cost audit fees deposit money banks financial performance insurance cost VECM

Article Details

Author Biographies

Stella Ogechukwu Okezie, Michael Okpara University of Agriculture Umudike, Nigeria

Okezie, Stella Ogechukwu (Ph.D.) is a Senior Lecturer in the Department of Accounting at Michael Okpara University of Agriculture, Umudike, Abia State, Nigeria. She holds a first degree in Accounting from Babcock University and a Masters’ degree in Finance from the same University. She had her Doctorate in Accounting from the Michael Okpara University of Agriculture Umudike, where she works. Her teaching experience spans over 12 years at the tertiary level of education. Her research interest includes Auditing, Management Accounting, Ethics and Governance, Financial Management, and Social and Environmental accounting.

Samuel Chinedu Okereke, Michael Okpara University of Agriculture Umudike, Nigeria

Chinedu Samuel Okereke is the Principal of Topnotchers International Academy Aba, Abia State,  Nigeria. He was awarded a Batchelor of Science degree in Accounting from Michael Okpara University of Agriculture Umudike. He is currently pursuing his Master of Science degree in Accounting at the same University. His area of research interests are in finance, sustainability, and education.

How to Cite
Okezie, S. O., & Okereke, S. C. (2023). Compliance Costs and Financial Performance of Deposit Money Banks in Nigeria. Pan-African Journal of Education and Social Sciences, 4(1). Retrieved from https://journals.aua.ke/pajes/article/view/339
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