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" Impact of Risk Management on Financial Performance of Deposit Money Banks in Nigeria "
Tiamiyu, Surajudeen
Akeem, Salami
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Latin Dissertation
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| Language of Document
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English
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| Record Number
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1052641
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| Doc. No
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TL51758
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| Main Entry
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Tiamiyu, Surajudeen
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| Title & Author
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Impact of Risk Management on Financial Performance of Deposit Money Banks in Nigeria\ Tiamiyu, SurajudeenAkeem, Salami
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| College
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Kwara State University (Nigeria)
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| Date
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2019
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| Degree
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M.S.
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| student score
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2019
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| Note
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94 p.
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| Abstract
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Financial management crisis around the world has proven that risk management practices are indispensable for organizations that aim at sustaining customer and shareholder patronage. The bank’s motivation for risk management comes from those risks which can lead to underperformance. This study specific objective are to: establish the impact of credit risk, liquidity risk, operational risk, capital adequacy risk, and market risk management on performance of deposit money banks in Nigeria. The study used secondary data gathered through content analysis of the sampled deposit money banks’ annual reports and account quoted on the Nigerian stock Exchange; the period covered in the study is 2008-2017. Then, the collected cross sectional panel data was analyzed and described by basic statistical techniques such as descriptive analysis, Pearson correlation analysis and panel least square (fixed effects model) regression analysis. Risk management practice is proxy by banks specific risk selected indicators on credit risk (non-performing loan ratio), operational risk (operation expenses on net interest margin ratio’s), liquidity risk (liquidity ratio’s), capital risk (tier1 capital/risk weighted asset ratio) and market risk (interest rate risk and foreign exchange risk) as explanatory variables while Bank performance proxy by return on assets (ROA) and returns on equity (ROE) used as dependent variables of the study. The findings revealed that operational risk has negative statistically significant effect on return on assets (β=-0.062, p<0.05). Capital adequacy risk has positive significant effect on returns on equity (β=0.518, p<0.05). Credit risk of (β=-0.130, p<0.05) and operational risk of (β=-0.172, p<0.05) have negative significant effect on returns on equity. Meanwhile capital adequacy risk, foreign exchange risk, liquidity risk and interest rate risk have no positive and negative significant on return on assets due to the fact that those variables are being properly monitored as an effective risk management indicators. Also, liquidity risk and foreign exchange risk do not have significant effect on returns on equity of the deposit money banks. The findings appear to be largely consistent with previous works as the overall F-statistic and its probability (p<0.05) shows statistical impact of risk management on financial performance of deposit money banks’ in Nigeria in both models. The study therefore concluded that at both level of significant risk management practice has significant effect on deposit money banks performance in Nigeria for the period of the study. Based on the study findings, it is recommended that banks in Nigeria should enhance their capacity in credit analysis and loan administration, control their operating risk, through operating expense level, to increase and maintain their capital requirements so as to prevent shareholders wealth maximization. The regulatory authority should also pay more attention to banks’ compliance to relevant provisions and prudential guidelines.
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| Descriptor
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Finance
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Akeem, Salami
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| Added Entry
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Kwara State University (Nigeria)
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