RISK MANAGEMENT AND FIRM PERFORMANCE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA.
Abstract
This study investigates the effect of corporate risk management on the financial performance of listed deposit money banks (DMBs) in Nigeria from 2013 to 2023. Thirteen (13) banks were purposively selected, and panel data were analyzed using the Panel Generalized Least Squares (PGLS) method after conducting relevant diagnostic tests. Return on Assets (ROA) was used as the proxy for performance, while the independent variables included Credit Risk Management (CRM), Capital Adequacy Ratio Management (CARM), Liquidity Risk Management (LQRM), Non-Performing Loan Ratio Management (NPLRM), and Loan-to-Deposit Ratio Management (LDRM). Findings show that CRM negatively affects ROA, indicating that higher credit risk reduces profitability. CARM has a positive but insignificant effect, suggesting limited influence of capital buffers on performance. LQRM shows a marginal negative effect, implying that excess liquidity may reduce returns. NPLRM has a significant negative impact, confirming that poor loan quality undermines profitability. LDRM also negatively affects ROA, reflecting the risks of excessive lending relative to deposits. The study recommends enhanced credit screening, efficient liquidity management, and optimal capital and lending practices to improve bank performance.
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