Effect of Risk Management on Financial Performance of Deposit Money Banks in Nigeria
DOI:
https://doi.org/10.31150/ajebm.v7i6.2799Keywords:
Risk Management, Net Interest Margin, Financial PerformanceAbstract
The study investigated the effect of risk management on financial performance of deposit money banks in Nigeria. The study employed ex post facto research design. This design is chosen and applied because of the fact that the various elements of the design are not under the control of the researcher. The data for this study already exists hence; it is used for secondary data study. The population for this study consisted of twenty-six (26) listed deposit money banks in Nigeria spanning between 2010-2022. This study employed the judgment sampling technique. The sample size is made up of two (2) DMBs which includes United Bank for Africa Plc, Fidelity. Data for this study were collected from the published financial statements of the selected listed deposit money banks in Nigeria. This study used estimated technique of both descriptive statistics and Ordinary least square (OLS) regression analysis method with the help of E-view-9 software. The study specifically concluded that net interest margin (NIM) is a statistically significant predictor of gross profit (GP), while loan loss provision (LLP) is not statistically significant at the 0.05 significance level. The study also established that net interest margin is statistically significant and has a positive effect on operating income (OI). However, loan loss provision is not statistically significant and does not appear to have a significant effect on operating income. The researchers suggested that Deposit money banks should continually strengthen their risk assessment processes and implement robust risk mitigation strategies to minimize potential losses.
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References
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