Impact of Business Ethics on Performance of Selected Microfinance Banks in Ilorin Metropolis, Kwara State, Nigeria

Abstract

The rise in the spate of failure of banks has become alarming despite several legal and regulatory framework put in place to prevent such. The Nigerian government upgraded the activities of the then Community Banks to Microfinance Banks to checkmate some of the observed lapses. This study examines the relationship between the business ethics of the top executives of microfinance banks in  Nigeria and their financial and non financial performance. Using cluster sampling techniques, one hundred and twenty-nine (129) executives from six microfinance banks in Ilorin metropolis, Kwara State, Nigeria, were selected. Data were collected through self-administered questionnaire and analysed through descriptive, comparative, regression analysis and  Correlation methods of analysis. The findings revealed that there exist a positive relationship between business ethics and the business performance of the microfinance banks. In specific terms, findings showed that the ethical index had beta-co-efficient of 0.814 while community index and diversity index  had 0.55 and 0.180. all the statistics were significant at 95% confidence level.While the environmental index shows an adverse relationship to both financial and non-financial performance, the trio of ethical index, community index and diversity index had significant positive impact on the financial and non-financial performance of the microfinance banks. Based on these findings, it was recommended that the microfinance banks should ensure that they increase their presence in their host communities, reduce environmental footprint, formulate and adhere to stakeholders oriented code of business conduct in order to improve their public image, increase market share and ultimately their profitability.

Keywords: Business; ethics; bank; microfinance;  financial services; money deposit bank