The Influence of Assets Management on Financial Performance of Some Selected Nigeria Deposit Money Banks

Abstract

The stability of Deposit Money Banks as whole in the economy depends on proper asset management structure. Asset liability management in Deposit Money Banks is determined by the ability of the banks to retain capital, absorb loans losses, support future growth of assets and provide returns to investors. The research work was embarked upon due to challenges observed to be facing financial institution; The impact of changes in the regulatory environment on banks is that banks are receiving less hands-on assessment by the regulators, less time spent with each institution, and the potential for more problems slipping through the cracks, potentially resulting in an overall increase in bank failures. The major aim of this study is to identify the best possible strategy to manage the composition of financial institutions’, assets and liability management by controlling the various types of business strategies to maximize profitability and increase performance. Data used in this study was obtained from Central Bank of Nigeria (CBN) annual statistical bulletin and from audited financial statement of selected Nigerian Deposit Money Banks. The sourced data which consist of time-series and cross sectional data were analyzed using the econometric view (E-view) software to compute a descriptive statistic of the study variables and a panel data regression analysis was used to explore the relationship between AML and Financial performance. Findings showed that loans and advances are positively related to return on equity especially when profitability is measured as proxy of financial performance, while the liability variables are negatively related to the measure of bank performance adopted in this study. It was concluded that asset management has significant effect on financial performance of Nigerian deposit money banks. In conclusion, asset management positively and liability management negatively related to profitability of Deposits Money Bank. Recommendation, therefore that poor management of loans and advances should be avoided by banks as much as possible as this will see to it that the profitability of Deposits Money Bank in Nigeria increase given them competitive edge. Also, high cost of operations which has significant effects on profitability of Deposits Money Bank in Nigeria as found out in the study should be mitigated by banks as this will see to it that the issue of untimely death by banks is avoided.