Thesis (MSc) - Cyprus International University. Institute of Graduate Studies and Research Accounting and Finance Department

Includes bibliography (sheets 48-52)

ABSTRACT The banking sector is a highly sensitive and volatile sector of the economy that requires effective management and control, ensuring a viable internal control system is therefore an imperative procedure tow for enhancing the financial performance of commercial banks. The study investigates the impact of internal control on the financial performance of 10 selected commercial banks in Nigeria; with a focus on the impact of the indicators of internal control from 2011 to 2020. The fixed and random effects of Panelized Least Square (PLS) were to examine secondary time series data acquired from bank audited statements of account. The panel unit root test indicated the data's stationarity, while the panel cointegration test confirmed the study's variables' long-run association. The Hausman test specified that fixed effect model is more appropriate for the study. The fixed effect analysis of the PLS revealed that the risk management committee had a significant and direct impact on the profit after tax amongst Nigeria's banks. That is, one unit increase in the number of risk management committees increased the profit after tax by 0.21 percent. However, the board size was found to have an adverse and statistically insignificant impact on bank's profitability in Nigeria. The results indicated that one unit increase in the board size reduces the profit after tax by 0.012 percent. Audit committee, number of employees, and period of the audit were found to have a positive but insignificant effect on profitability. The study concluded that effective risk management serves as an effective internal control measure that boosts financial performance of banks in Nigeria. Therefore, it was recommended that the number of people in the risk management committee of the banks should be well selected and scrutinized in order to ensure that credible individuals are part of the system as well as supervised by the monetary authority so as to ensure transparency in the aspects of internal control in the Nigerian commercial banks.