Effect of Risks Management on the Financial Performance of Listed Deposit Money Banks in Nigeria

Abstract

This study examined the effect of risk management on the financial performance of listed DMBs in Nigeria. Adopting correlation research design, the target population was all the listed DMBs in Nigeria as at 31st December, 2022 and were nineteen (19) in number. Out of the 19 banks, 16 were purposively selected as sample based on the criteria that, the bank must have been listed before 31st December 2017 and also have complete annual report and account over the period of five years from 2018-2022. The study used descriptive statistics and panel regression analysis to analyze the data collected, and the results of the analyses revealed that, credit risk management, market risk management and capital adequacy risk management have positive and significant effect on the financial performance of the listed DMBs in Nigeria over the period of the study. However, liquidity risk management was found to have negative but insignificant effect on the financial performance of the banks. Hence, the study concluded that; effective risk management have positive and significant effect on the financial performance of listed DMBs in Nigeria. Based on these findings, this study recommends that; the management of listed DMBs in Nigeria should improve and strengthen their liquidity management strategies, while keeping adequate watch on credit risk, market risk, and capital adequacy risk to further improve their financial performance. Therefore, further studies could look into the effect of effective risk management process (risk identification, assessment, monitoring, and controlling process) on the financial performance of DMBs. Also, future studies could consider the impact of the adoption of IFRS on risk management and financial performance of listed DMBs in Nigeria.