RISK AND FINANCIAL PERFORMANCE OF LISTED DEPOSIT MONEY BANKS IN NIGERIA
Yusuf Junior Gwamna, Dr. Nurudeen Usman Miko and Dr. Murtala Abdullahi
Volume 8 Issue 1
Abstract
Risk is becoming a critical factor for every bank around the world. Banks play a predominant role in credit expansion and granting credit facilities. Banks are generally facing various kinds of risks. Among these, credit risk and capital adequacy risk makes a severe threat to financial performance. This study examined risk and financial performance of listed deposit money banks (DMBs) in Nigeria for the period of ten years from 2011-2020. The study adopted correlation research design, and a sample size of 13 listed deposit money banks listed on the floor of Nigerian Stock Exchange as at 31st December, 2020. Secondary data of the sampled banks was extracted from the annual audited financial reports of the banks. The data was analyzed using the multiple regression model where in the generalized least square result revealed a positive and significant impact between credit risk and capital adequacy risk on the financial performance of the deposit money banks in Nigeria for the period. The study concluded that risk significantly influences the financial performance of DMBs in Nigeria. Based on the findings, the study recommends that DMBs managers in Nigeria can minimize credit risk by ensuring that the credit worthiness of would be borrowers is assessed together with the collateral which should be wholly ensured. Keywords: Capital Adequacy, Credit Risk, Financial Performance, Risk.
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