RISK MANAGEMENT AND FINANCIAL PERFORMANCE OF QUOTED DEPOSIT MONEY BANKS IN NIGERIA

ABSTRACT The financial performance of banks is critical to the stability of the broader economy, especially in developing countries like Nigeria, where banks play a central role in financial intermediation, but the performance of banks is increasingly threatened by various risks. This study examined the risk management and financial performance of quoted deposit money banks in Nigeria, from 2012 to 2023. The population comprises all the ten quoted deposit money banks in Nigeria while filtering criteria was used to arrive at a sample size of nine (9) deposit money banks. The hypotheses were tested using random effect regression model after conducting some diagnostics tests. The results showed that interest rate risk (IRR) has a significant positive effect on financial performance of quoted deposits money banks in Nigeria. However, exchange rate risk (ERR) has an insignificant positive effect on financial performance of quoted deposits money banks in Nigeria while credit risk (CR) has an insignificant negative effect on financial performance of quoted deposits money banks in Nigeria. The study recommends among others, that the banks should implement regular monitoring systems to detect early signs of loan default. Proactive measures, such as restructuring loan terms for distressed borrowers and improving loan recovery strategies, should be in place to minimize the risk of defaults. Also, the banks should continue to refine their risk management frameworks to capitalize on favorable interest rate movements. This includes maintaining a balanced asset-liability structure and regularly assessing the interest rate sensitivity of their portfolios to ensure they can profit from interest rate fluctuations.

0 19 May, 2026

pg: 11

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