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THE EFFECT OF INTERNAL CONTROL ON PERFORMANCE OF COMMERCIAL BANKS IN NIGERIA
ABSTRACT
The globalization process, the complexity of banking transactions and the increase in fraudulent activities have recently prompted scholars and experts, and authorities to divert their attention to internal control systems in the banking sector. The objective of this study is to find the effect of internal control systems on the performance of commercial banks in Nigeria. A survey method was employed and the study used stratified random sampling, in which a total of 382 questionnaires were administered to either staff of operations, marketing, or security department in the Nigerian commercial banks. The questionnaire is a 5 point Likert-scale while the data collected was analyzed using Statistical Package for the Social Sciences (SPSS) version 23 (v23) and Smart PLS 3. The findings of the study revealed that there is a positive and significant relationship between the four components of internal control (control environment, control activities, monitoring and risk assessment) and bank performance. While information and communication were found to have an insignificant positive relationship with bank performance. The study recommended that future research should add other additional variables like risk culture, corporate governance. Likewise, control variable (s) such as bank size, bank age, etc. can also be considered by future researchers.
Keywords: Internal Control, Commercial banks, Bank performance, COSO.