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" Nexus Between Foreign Exchange Exposure and Performance of Deposit Money Banks in Nigeria "
Oluganna, Eunice Tinumo
Ijaya, Muftau Adeniyi
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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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1110349
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| Doc. No
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TLpq2485483567
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| Main Entry
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Ijaya, Muftau Adeniyi
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Oluganna, Eunice Tinumo
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| Title & Author
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Nexus Between Foreign Exchange Exposure and Performance of Deposit Money Banks in Nigeria\ Oluganna, Eunice TinumoIjaya, Muftau Adeniyi
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| College
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Kwara State University (Nigeria)
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| Date
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2020
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| student score
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2020
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| Degree
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Ph.D.
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| Page No
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177
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| Abstract
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The increasing dealings in foreign exchange by commercial banks expose their performance to the sensitivity of change in real domestic currency. It is against this background that this study examines the nexus between foreign exchange exposure and performance of Deposit Money Banks in Nigeria. Precisely, the specific objectives were to:(i)examine the effectof transaction exposure on performance of deposit money banks in Nigeria;(ii)determine the impact of economic exposure on performance of deposit money banks in Nigeria; (iii)examine the effect of translation exposure on performance of deposit money banks in Nigeria; and (iv)to estimate foreign exchange exposure of deposit money banks in Nigeria. The study adopted an ex-post facto method of research design using a panel data covering the period 2004-2019. Data were obtained from the various bank annual financial reports and Central Bank of Nigeria data book. The data obtained were subjected to cashflow method of measurement to compute foreign exchange exposure of banks and Nonlinear Autoregressive Distributed Lag (NARDLto examine the nexus between foreign exchange rate exposure and performance of deposit money banks in Nigeria. From the whole sample estimation, the study revealed that transaction exposure with coefficient values (-3.65-4.53,0.25,3.75) at (1%,1%,1%,1%) significant levels, affects negatively capital quality, asset quality, management quality and earnings. With rule of numbers, transaction exposure has a negative effect on performance of deposit money banks in Nigeria. More so, capital quality, asset quality, management quality, earnings and liquidity were negatively exposed to economic exposure with coefficient values of (7.83, -1.26, 0.15, -1.90, 10.1) at ( 1%, 5%, 5%, 1%, 5%)significant levels respectively. Furthermore, capital quality, asset quality, management quality and earnings were negatively exposed to translation exposure with coefficient values of (-1.06, -15.6,0.05 and 1.95) at (5%, 5%, 1%, and 1%) significant levels respectively. With rule of numbers translation exposure has a negative effect on performance of deposit money banks in Nigeria. Finally, from the estimation result, Access bank, Zenith bank, United Bank for Africa, Union bank are negatively exposed to foreign exchange exposure. The study therefore, concluded that a negative and asymmetric relationship exists between foreign exchange exposure and the performance of deposit money banks in Nigeria. The study therefore recommends, among other things, that Management of Deposit Money Banks in Nigeria should endeavour to apply a combination of simple hedging tools such as the use of forward contracts and swaps to supplement price adjustments and investment in foreign currency in order to minimize their exposure to changes in exchange rate.
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| Subject
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Accounting
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African studies
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Banking
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Finance
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International relations
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Management
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