IIARD International Institute of Academic Research and Development

IIARD INTERNATIONAL JOURNAL OF BANKING AND FINANCE RESEARCH (IJBFR )

E-ISSN 2695-1886
P-ISSN 2672-4979
VOL. 10 NO. 4 2024
DOI: 10.56201/ijbfr.v10.no4.2024.pg98.116

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Risk Management Impact on Deposit Money Banks’ (DMBs’) Performance in Nigeria

Mbanefo Patrick Amaechi, Ph.D

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Abstract

This study analysis Risk Management Impact on Deposit Money Banks’ (DMBs’) Performsnce in Nigeria. Specifically, the study is an effort to analyse, ascertain, evaluate and explore the effects of credit risk, liquidity risk, operational risk, and capital risk respectively on return on equity of DMBs in Nigeria. Data were sourced from Central Bank of Nigeria (CBN) Annual Reports and Accounts and the Nigeria Deposit Insurance Corporation (NDIC) Annual Reports. Econometric techniques of Augmented Dickey Fuller Tests for Unit Roots and Ordinary Least Square (OLS) were used for the analysis. From the unit root test, it was discovered that the variables showed stationarity at level and first difference which necessitated the use of Autoregressive distribution lag (ARDL) the analysis. It was revealed that risk management has insignificant effect on the performance of DMBs within the study scope. Consequently, this study recommends that as the principal regulator for banks, the CBN should strengthen its regulatory framework to provide a best in practice approach to risk management. The DMBs are equally advised to equip their credit and risk management officers with risk management skills and competences. The CBN should equally carryout comprehensive and reqular risk assessments while promoting risk awareness culture through their on-site and off-site supervisions.

keywords:

Risk Management, Bank Performance, Deposit Money Bank, Basel 11

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