Efficacy of Balanced Scorecard on Performance of Banks in Nigeria

Abstract

This study examines the efficacy of balance scorecard (BSC) on the performance of banks in Nigeria as one of the most topical issues in the banking sector. The study was motivated by the imperfections of traditional performance measurement system which is inadequate as it is limited to financial analysis and does not provide for an integrated analysis of performance that captures the non-financial variables, such as customer, learning and growth and internal business process. The study was based on expost facto research design and made use of historical data of five selected banks spanning a period of eleven years (2007-2017). It was hypothesized that customer internal business process, learning and growth and financial perspectives have no significant effect on the performance of banks in Nigeria. The result indicates that customer perspective and internal business process perspective have significant effect on performance of banks in Nigeria, while financial perspective and learning and growth perspective have no significant effect on banks performance in Nigeria. It was recommended that banks in Nigeria should adopt the BSC approach to measure and manage their performance in view of its capacity to provide a comprehensive information on bank performance evaluation. It was further suggested that banks should be more innovative on customer and internal business process aspect of their operations in order to maximize performance. It is also stressed that banks should accord learning and growth components of their operations a significant attention. Keywords: Balanced Scorecard, Bank Performance and Measurement, Nigeria DOI: 10.7176/EJBM/11-23-05 Publication date: August 31st 201