MANAGERIAL OPPORTUNISM, DIGITAL BANKING AND THE PERFORMANCE OF MICROFINANCE BANKS IN NIGERIA

Abstract

The performance of microfinance banks (MFBs) in Nigeria is a major economic and political issue that has been the subject of various studies. The relationship between shareholders and managers of MFBs is expected to result in profitability if all norms in the act of funding, monitoring, management, and work environment are met. However, a considerable number of these institutions were forced to collapse. As a result, the government’s efforts to employ MFBs to enhance rural people’ living standards, alleviate poverty, and provide microcredit to both rural and urban populations failed to provide the desired results. Accounting choices and disclosures in financial reporting can be harmed by opportunistic financial information distortion driven by a manager’s desire to fulfil predetermined earnings targets. Accounting measures’ reliability and informative value will be degraded if their contracting and controlling responsibilities are breached, because they are utilized to judge a company’s underlying economic performance. As a result, in order for the agents to play the dependable, contracting, and regulating roles that the principal expects, the metrics must be done with a high level of trust in them. Agents regularly backslide on this position due to management opportunism, resulting in the system’s inability to provide expected revenues with the agent’s and professionals’ honesty. All traditional banking activities and programs that were previously only available in person at a bank branch have been digitized. By eliminating human mistake and enhancing customer loyalty, digital banking may help microfinance institutions counteract the influence of management opportunism on their success. In the context of digital banking, the impact of management opportunism on the performance of microfinance banks in Nigeria was explored. The results of both fixed and random effects estimations revealed that none of the parameters included to explain the consequences of managerial opportunism on microfinance bank performance in Nigeria are significant, with digital banking as one of the control variables. This suggests that managerial opportunism has no influence on the performance of microfinance banks in Nigeria when it comes to digital banking.