The Effect of Financial Incentives on Business Sustainability Performance of Deposit Money Banks in Nigeria: A Panel Data Analysis

Nigerian Deposit Money Banks (DMBs) face growing pressure to demonstrate sustainability commitment, yet the mechanisms driving Corporate Social Responsibility Expenditure (CSREX) remain poorly understood. Existing literature has largely examined regulatory and financial performance drivers of sustainability, while the role of internal and external financial incentives remains underexplored. This study investigates how Executive Compensation (EXCOM), Board Bonuses/Incentives (BBINC), and Government Subsidies/Incentives (GSINC) influence business sustainability performance, proxied by CSREX, among five listed Nigerian DMBs over a ten-year period (2015–2024). Using panel data and fixed effects regression validated by the Hausman test, findings reveal that EXCOM (β = 0.324, p < 0.01) and GSINC (β = 0.275, p < 0.01) significantly and positively influence CSREX, leading to rejection of their respective null hypotheses. Conversely, BBINC (β = -0.091, p = 0.173) shows no significant effect, and its null hypothesis is retained, indicating misalignment between board-level rewards and sustainability objectives. Firm size (FSIZE) positively influences CSREX (β = 0.221, p < 0.05). The model explains 69.2% of variance in CSREX (R² = 0.692). The study concludes that while executive pay structures and government incentives effectively promote sustainability investments, board-level reward systems require restructuring to incorporate ESG metrics. Policy implications include integrating sustainability indicators into executive and board compensation frameworks and strengthening regulatory CSR reporting requirements.

Financial Incentives, Business Sustainability Performance, Corporate Social Responsibility Expenditure (CSREX), Deposit Money Banks.

1. Aiyedogbon, J. O., Oniore, J., & Alegu, C. I. (2023). Asymmetric analysis of macroeconomic and financial determinants of deposit money banks performance in Nigeria. International Journal of Business Management, 11(9). 104-329 [Google Scholar] [Crossref]

2. Akinwumi, I. A., Muturi, W., & Ngumi, P. (2016). Financial incentives and financial innovation adoption in Nigeria (2005–2010). International Journal of Economics and Financial Issues, 6(4), 45-61. https://doi.org/10.51244/ijrsi.2024.1106031 [Google Scholar] [Crossref]

3. Ariyibi, E. M., Yunusa, L. A., & Williams, T. O. (2020). Bank specific factors and bank performance: Evidence from Nigeria. Signifikan: Jurnal Ilmu Ekonomi, 9(2), 205–220. https://doi.org/10.15408/SJIE.V9I2.14658 [Google Scholar] [Crossref]

4. Bamidele, V. O. (2025). An empirical analysis of the effect of corporate governance on the financial performance of deposit money banks in Nigeria. International Journal of Accounting, Management, Economics and Social Sciences, 3(3), 724–742. https://doi.org/10.61990/ijamesc.v3i3.482 [Google Scholar] [Crossref]

5. Bamidele, V. O., Olomola, F. O., & Akomolafe, A. A. (2025). Entrepreneurial financing decisions and the profitability of listed non-financial firms in Nigeria (2015–2024). International Journal of Economics and Financial Management (IJEFM), 10(8), 255–276. https://doi.org/10.56201/ijefm.v10.no8.2025.pg255.276 [Google Scholar] [Crossref]

6. Bamidele, V. O., Omodara, B. E., Olatunji, O. F., & Ogundipe, F. B. (2025). Corporate social responsibility disclosure and financial performance: A study from industrial goods firms in Nigeria. Asian Journal of Economics, Business and Accounting, 25(7), 92–103. https://doi.org/10.9734/ajeba/2025/v25i71877 [Google Scholar] [Crossref]

7. Central Bank of Nigeria (CBN). (2012). Nigerian Sustainable Banking Principles. Abuja: Central Bank of Nigeria. [Google Scholar] [Crossref]

8. Danmulki, B. I., Agbi, E. S., & Mustapha, L. O. (2022). Liquidity management and financial performance of listed deposit money banks in Nigeria. Gusau Journal of Accounting and Finance, 3(2), 121-137. https://doi.org/10.57233/gujaf.v3i2.144 [Google Scholar] [Crossref]

9. Efemena, E. O., & Augustine, C. I. (2024). Bank liquidity and financial performance of deposit money banks in Nigeria. International Journal of Scientific Research and Management, 12(12), 98-120. https://doi.org/10.18535/ijsrm/v12i12.em04 [Google Scholar] [Crossref]

10. Fama, E. F., & Jensen, M. C. (1983). Separation of ownership and control. Journal of Law and Economics, 26(2), 301–325. https://doi.org/10.1086/467037 [Google Scholar] [Crossref]

11. Freeman, R. E. (1984). Strategic management: A stakeholder approach. Boston: Pitman. [Google Scholar] [Crossref]

12. Gbanador, M. A., Makwe, E. U., & Olushola, O. A. (2022). Financial innovation and performance of deposit money banks in Nigeria. IIARD International Journal of Banking and Finance Research, 9(2), 37–50. https://doi.org/10.56201/ijbfr.v8.no2.2022.pg37.50 [Google Scholar] [Crossref]

13. Ilesanmi, A. F., Omowunmi, A. C., & Ifeanyi, O. P. (2025). Effect of interbank deposit funding on the financial performance of deposit money banks in Nigeria. International Journal of Applied Economics, Finance and Accounting, 21(1), 61-76. [Google Scholar] [Crossref]

14. Isaac, O. I., & Oyedeji, A. (2023). Impact of corporate governance and financial performance of money deposit banks in Nigeria. International Journal of Research and Scientific Innovation, 7(1). 110-126. https://doi.org/10.51244/ijrsi.2024.1106031 [Google Scholar] [Crossref]

15. Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. [Google Scholar] [Crossref]

16. Korolo, E. O., & Korolo, S. A. (2023). Corporate sustainability reporting and financial performance of deposit money banks in Nigeria. FUDMA Journal of Accounting and Finance Research, 1(3), 75–86. https://doi.org/10.33003/fujafr-2023.v1i3.63 [Google Scholar] [Crossref]

17. Lawal, S. T. (2023). The impact of internal factors on financial performance: An empirical study of Nigerian deposit money banks. International Journal of Economics, Finance and Management Sciences, 4(8), 72-89. https://doi.org/10.55640/ijefms-9128 [Google Scholar] [Crossref]

18. Monday, J. U., Dopemu, O. S., & Ademola, B. I. (2024). Financial innovation and financial performance of Nigerian listed deposit money banks: Evidence from panel data modeling. European Journal of Accounting, Auditing and Finance Research, 12(9), 121-136. https://doi.org/10.37745/ejaafr.2013/vol12n93252 [Google Scholar] [Crossref]

19. Ogundipe, F. B., Olatunji, O. F., Omodara, B. E., & Bamidele, V. O. (2025). Assessment of the impact of environmental operating costs on return on assets: Evidence from listed breweries in Nigeria. International Journal of Research and Scientific Innovation (IJRSI), 12(8), 746-757. https://doi.org/10.51244/IJRSI.2025.120800061 [Google Scholar] [Crossref]

20. Okere, W. (2023). Financial sustainability reporting: A focus on deposit money banks in Nigeria. Finance & Accounting Research Journal, 5(7), 95-115. [Google Scholar] [Crossref]

21. Oladejo, O. J. (2023). Financial management practices and profitability of deposit money banks in Nigeria. African Journal of Accounting and Financial Research, 12(6) 55-70. https://doi.org/10.52589/ajafr-hgvpe5tl [Google Scholar] [Crossref]

22. Olunuga, A., & Agbesuyi, O. (2023). Interbank transactions, financial performance and sustainability in deposit money banks. Ekonomikuri Prop'ili, 5(7), 172-190. https://doi.org/10.52244/ep.2023.25.05 [Google Scholar] [Crossref]

23. Olunuga, O. A., & Akinrodoye, O. M. (2022). Financial management practices and performance of deposit money banks in emerging market. Economic Insights – Trends and Challenges, 2(1), 71-87. https://doi.org/10.51865/eitc.2022.01.07 [Google Scholar] [Crossref]

24. Osadume, R., & Okene, A. O. (2021). Financial sector sustainability and performance – Policy imperative for the monetary authorities. Journal of Management and Business, 11(4), 52-68. https://doi.org/10.1108/JMB-04-2021-0007 [Google Scholar] [Crossref]

25. Oshim, J. C., & Nze, O. N. (2024). Foreign exchange income and financial performance of deposit money banks in Nigeria. European Journal of Accounting, Auditing and Finance Research, 12(2), 72-90. https://doi.org/10.37745/ejaafr.2013/vol12n23450 [Google Scholar] [Crossref]

26. Scholtens, B., & Van 't Klooster, S. (2019). Sustainability and bank risk. Palgrave Communications, 5(1), 12-25. https://doi.org/10.1057/S41599-019-0315-9 [Google Scholar] [Crossref]

27. Suleiman, U., Popoola, A., & Yahaya, A. O. (2021). Equity financing and financial performance of listed deposit money banks in Nigeria. International Journal of Research and Innovation in Social Science, 5(12), 47-62. https://doi.org/10.47772/ijriss.2022.61236 [Google Scholar] [Crossref]

28. Temidayo, A. O. (2023). Intellectual capital investment and business sustainability of deposit money banks in Nigeria. International Journal of Research and Innovation in Social Science, 2(7), 40-55. https://doi.org/10.47772/ijriss.2023.7011126 [Google Scholar] [Crossref]

29. Uniamikogbo, E., Okoye, E. I., & Amos, A. O. (2020). Income diversification and financial performance of selected deposit money banks in Nigeria. International Journal of Applied Management Sciences and Engineering, 8(1), 65-80. https://doi.org/10.4018/IJAMSE.20210101.OA1 [Google Scholar] [Crossref]

30. Uwuigbe, U., Teddy, O., Uwuigbe, O. R., et al. (2017). Sustainability reporting and firm performance: A bi-directional approach. Academy of Strategic Management Journal, 16(6), 108–123. [Google Scholar] [Crossref]

• Financial Technology (Fintech): Current Research at The Cutting Edge
• Reforming Corporate Governance in Malaysia to Address Fraudulent Financial Reporting Cases
• Stock Market Efficiency and Economic Diversification in Nigeria and South Africa
• Financial Stability and Financial Performance of Small and Medium Tiered Deposit Taking Savings and Credit Cooperatives in Kenya.
• Regulator Sandboxes for DeFi: A Comparative Analysis of Policy Effectiveness in the EU, US, and Asia Pacific