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Financial Risk and Financial Flexibility: Evidence from Deposit Money Banks in Nigeria.

Kola Adegoke & Yusuf Olatunji, Oyedeko

Abstract

The study examines effect of financial risk on financial flexibility of Deposit Money Banks. Expos-facto research design was used for the study. This study used secondary data, sourced from the data were extracted from the audited financial reports of the banks within the period of the study for the period of ten years spanning from 2007 to 2016. The data was analysed using panel data regression analysis. The study found that funding liquidity risk has positive but insignificant effect on financial flexibility while solvency risk has negative significant effect on financial flexibility. The study concluded that financial flexibility can be determined by the both liquidity and solvency risk facing the banks, which in turn reflects their current capital levels in meeting their financial obligation. In line with the conclusion, the study recommends that management of Deposit Money Banks should strive towards expanding the customers’ base in order to deposits frequency through provision of enhanced financial services and this will enhance daily capital level in meeting their obligation

References

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