Despite the importance of the banking industry to the continuing economic development of Nigeria, there remains a dearth of timely and relevant studies that examine the impact of internal controls on banking performance in Nigeria in particular, a gap this study was intended to fill. For instance, in recent years, the Nigerian Stock Exchange has created an unprecedented capitalization in stock and has managed to attain the listing of some Nigerian banks in the foreign stock exchange market (Okurame, 2008). By identifying opportunities for improving internal control, it may be possible to develop salient recommendations for improving the performance of the Nigerian commercial banks listed on the Nigerian Stock Exchange. According to Okafor and Ibadin (2008), the ultimate winners in their marketplaces and industries are those establishments that operate on strong systems of internal control.
Beyond business theory and literature, the findings of this study will provide a knowledge-based system that can serve as a decision aid for managers and auditors in identifying internal control weaknesses and then preventing their adverse consequences. Shareholders expect business managers to manage the significant risks the company is facing and to put controls in place to deal with such risks. A sound system of internal control contributes to protecting the investments of the shareholders and the assets of the company (Institute of Chartered Accountants of England and Wales, 1999). Generally, strong internal controls help push a company beyond its current limits, help it implement best practices, ensure it is not wasting valuable resources, and ensure it is serving its customers better than its competitors are (Okafor & Ibadin, 2009; Pereira & Santos, 2010).