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The study investigated the effects of corporate governance on delinquency management of microfinance banks in Nigeria with the aim to examine the impact of board size and board composition on delinquency management. The study applied Static panel regression estimate which involved pooled regression, fixed effect estimate, random effect estimate, Hausman test as the main estimation technique. Data on corporate governance (proxied by board size and board composition) and delinquency management (proxied by default rate) were obtained from Annual Financial Statement of respective microfinance banks over a period of seven (7) years from 2012 to 2018). The result revealed that board size has negative and significant effect on default rate and board composition has a negative and an insignificant effect on default rate. The result implies that bank managers should increase their board size with more management skills and professionalism, making it very difficult for the CEO to manipulate the board. The study concluded that corporate governance has negative effect on delinquency management of microfinance banks in Nigeria. The study recommended that management of microfinance banks should regulate the size of the board which should not be too large and must consist of highly skilled and competent professionals who are conversant with oversight function. Keyword: Corporate Governance, Credit Policies, Delinquency Management, Microfinance Bank, Nigeria. Introduction Corporate governance focuses on the way organisations are managed and controlled. This includes the best practices established and followed by organisations to ensure its operations are governed. Basically, corporate governance is the process that ensures how a firm is directed, controlled and held accountable. This involves interaction among stakeholders dealing with the organisation directly International Journal of Academic Research in Business and Social Sciences Vol. 1 0 , No. 5, May, 2020, E-ISSN: 2222-6990 © 2020 HRMARS 440 or indirectly including employees, shareholders, creditors, subcontractors and long-term suppliers (Brownbridge, 2007; Ndumai, 2013). Aliu and Gakure (2014) opine that corporate governance involves a system by which financial institutions such as microfinance banks relate to their customers and stakeholders to improve their quality of life. Therefore, good corporate governance ensures transparency, accountability and fairness in financial transactions and reporting (Oyewole, Olusanmi & Owolabi, 2015). Corporate governance is not only limited to corporate efficiency, it also relates to a much wider range of microfinance banks’ strategies and life cycle development (Unegbu, 2004). Microfinance banks record negative experiences of failure around the globe in recent time which gives credence to the need for good and sound corporate governance practices (Oyewole et al, 2015). According to Fernando (2006), microfinance banks (MFBs) around the world witness several failures as a result of high incidence of non-performing loans, weak management and poor governance. Shleifer, Andrei and Vishny cited in Ndumai (2013) assert that the sheer scale of fraud, embezzlement and graft in some failed microfinance banks has brought into question the reliability and effectiveness of present-day operational and compliance control mechanism and financial reporting systems of microfinance banks. The impact of corporate governance on microfinance bank seems unequally dispersed among countries. Some microfinance banks have become very significant in size and serve a good number of Small and Medium Enterprises (SMEs) customers, like the Grameen Bank in Bangladesh, or BRI in Indonesia, while other microfinance banks remain relatively small or even cease to exist (Cicea & Hincu, 2009). An important mechanism of governance is the quality of the board of directors. Accordingly, leadership characteristics of MFIs have great impact on their performance (Waithakam Gakure & Wanjau, 2013). The primary objective of every microfinance bank is to operate profitably in order to maintain its stability and improve performance and sustainability (Impact reporting and investment standards, 2010). However, existence of high levels of loan delinquency problem in microfinance industry in most countries negatively affects the level of services to SMEs (Ditcher, 2003). The governance of corporate microfinance bank plays a principal role in ensuring that the bank keeps to its mission of serving SMEs and other customers (Moauro & Spaggiari, 2011). Good corporate governance in microfinance banks is expected to underpin effective and efficient social performance within organisations (Waithakam et al, 2013). Good corporate governance promotes goodwill and confidence in the financial system. Studies show that good corporate governance leads to increased valuation, higher profit levels, increased sales growth and lower capital expenditure (Wolfgang, 2003). This view way supported by Lam, Tin and Lee (2008). The main objective of the study is to evaluate the extent to which corporate governance affects delinquency management of microfinance banks in Nigeria. Specifically, the study investigates: • the effects of board size on delinquency management of microfinance banks; • analyses the impact of board composition on delinquency management of microfinance banks in Nigeria. The other sections are divided into literature review, methodology, results and discussion as well as conclusion and recommendations. International Journal of Academic Research in Business and Social Sciences Vol. 1 0 , No. 5, May, 2020, E-ISSN: 2222-6990 © 2020 HRMARS 441 Literature Review Conceptual Clarifications Corporate Governance Alexandra, Reed, and Lajoux (2005) define corporate governance as the system by which companies are directed and controlled. The nature of corporate governance, therefore, going by this definition consists of two dimensions: direction and control. The direction dimension of corporate governance emphasises the responsibility of the board to attend to strategic positioning and planning in order to enhance the performance and sustainability of the company; while on the other hand, emphasises the responsibility of the board to oversee the executive management of the company in the execution of the plans and strategies. Sequel to the financial crisis in 2006 to 2007 witnessed all over the world especially in the banking sector, the issue of corporate governance has become an issue to talk about in both non academic settings and academic environment. Most studies have defined corporate governance in different ways especially as it concerns power of owners, managers and providers of capital (Solomon, 2010). The concept of corporate governance is viewed from two perspectives, namely, the narrow and broad perspectives. The narrow approach to corporate governance is viewed by Arun and Turner (2002) as the mechanism through which shareholders are assured that managers will act in their interest. Oyejide and Soyibo (2001) explain this narrow view of corporate governance as the relationship of the enterprise to shareholders. It is concerned with the structures within which a corporate entity or enterprise receives its basic orientation and direction. Shleifer and Vishny (1997) contend that corporate governance mainly deals with the ways in which the returns on investment of shareholders of an organisation are guaranteed. Similarly, Cadbury, Butler, Lipworth, Macdonald, Smith, Brown and Collum (1992) also narrowly describe corporate governance as an arrangement through which the affairs of shareholders are managed and controlled. Furthermore, Hart (1995) sees corporate governance as the interaction involving shareholders and the senior management of companies with board of directors acting as the mediator. According to Pandey (2006), corporate governance is a process that ensures responsibility, transparency and accountability functions of management in order to maximise shareholders wealth and take decisions to boost its financial performance. The broad view of corporate governance is concerned with the methods by which suppliers of finance control managers in order to ensure that their capital cannot be expropriated and that they earn a return on their investment. It views corporate governance as the relationship of the enterprise to society as a whole (Angahar & Mejabi, 2014). According to Oyejide and Soyibo, (2001), the broad perspective of corporate governance is described as being the heart of both a market economy and democratic society. Corporate governance entails incorporating the interest of stakeholders such as management, shareholders, customers, creditors, government and other stakeholders in the affairs of the organisation. In this regard, corporate governance is defined as a set of institutional arrangements for governing the interest of all the stakeholders who have contributed in one way or the other (Blair, 1995; Obasi & Nkwagu, 2017). Rogers (2008) opines that corporate governance is about building credibility, ensuring transparency and accountability as well as maintaining an effective channel of information disclosure that would foster good corporate performance. Roger (2008) further opines that it is about how to build trust and sustain confidence among the various interest groups that make up an organisation. Similarly, Salvioni, Gennari and Bosetti (2016) posit that corporate governance is a combination of structures and processes. While the structure refers to all the bodies responsible for the firm’s International Journal of Academic Research in Business and Social Sciences Vol. 1 0 , No. 5, May, 2020, E-ISSN: 2222-6990 © 2020 HRMARS 442 direction and control, the processes consist in the activities developed to satisfy the stakeholders’ expectation. Corporate governance, therefore, specifies the ways by which corporations are directed and guarded. The structure of corporat

Effects of Corporate Governance on Delinquency Management of Microfinance Banks in Southwest, Nigeria