EFFECT OF PRUDENTIAL GUIDELINES ON FINANCIAL PERFORMANCE OF MONEY DEPOSIT BANKS IN NIGERIA. (A STUDY OF THREE SELECTED BANKS)

ABSTRACT This study critically examines the effect of prudential guidelines on the financial performance of money deposit banks in Nigeria, with specific focus on three selected banks. Prudential guidelines, issued by the Central Bank of Nigeria (CBN), are regulatory frameworks designed to ensure financial stability, protect depositors, and promote sound banking practices. The research adopts a quantitative approach using secondary data obtained from the annual financial reports of the selected banks over a defined period. Key performance indicators such as Return on Assets (ROA), Return on Equity (ROE), and Non-Performing Loan (NPL) ratios were analyzed to determine the relationship between regulatory compliance and financial outcomes. Findings reveal that prudential guidelines have a significant impact on bank performance, particularly in improving asset quality and reducing credit risk. However, strict compliance may also constrain short-term profitability due to increased provisioning requirements. The study concludes that while prudential guidelines strengthen the long-term stability of banks, there is a delicate balance between regulation and profitability. Recommendations are provided to enhance regulatory efficiency and optimize bank performance.