RISK CONTROL AND FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA

Abstract

Optimal risk management strategy is vital for the reduction of threats that may hinder business performance.This investigation was conducted to study the influence of risk control on financial performance of deposit money banks quoted on the Nigeria Exchange. The study adopted the ex-post facto research design while the population of the study comprised of all quoted deposit money banks on the Nigerian Exchange from 1st Jan.2009 to 31st Dec.2020. The sample size of 8 banks was selected randomly by adopting the Yamane formula. Secondary data was extracted from the financial statements of the sampled banks covering the period of 10 years, 2009 to 2018. The study found that liquidity risks and credit positively significantly impact the financial performance of deposit money banks in Nigeria. Whereas, asset turnover ratio asserts an insignificant negative effect on the performance of banks in Nigeria. Additionally. Non- performing loan ratio significantly negatively impacted performance of deposit money banks in Nigeria. Based on these findings, the study recommends that, Nigerian deposit money banks should step up their liquidity and credit risks for optimum performance while trying to utilize the available resources for maximum revenue generation. More so, deposit money banks should monitor its non-performing loan ratio for optimum performance.

Keywords

• credit risk
• financial performance
• legal and regulatory risk
• liquidity risks and non-performing loan