RISK MANAGEMENT AND FINANCIAL PERFORMANCE OF LISTED COMMERCIAL BANKS IN NIGERIA

Abstract

This study examined the effect of risk management on financial performance of listed commercial banks in Nigeria. Specifically, the study examined effect of non-performing loans, loan loss provision, and prime lending interest rate on financial performance (proxy by Return on Assets) of listed commercial banks in Nigeria. A multiple regression estimation approach was employed on information extracted from a sample consisting of fifteen (15) listed banks on Nigerian Exchange Group between the years 2012 to 2019. Panel Least Square (PLS) regression technique was employed in estimating the data and testing the formulated hypotheses. The findings revealed that non-performing loans and  prime lending interest rate have no significant effect on financial performance of listed commercial banks in Nigeria, while loan loss provisions exhibited a significant relationship between it and return on equity of listed commercial banks in Nigeria In line with the findings, the study recommends that banks should maintain high credit standards while the apex bank (CBN) and other regulatory agencies should maintain high surveillance on banks’ credit operations. Also, management should as a matter of importance know how their credit policy affects the operation of their banks so as to ensure judicious utilization of deposits and maximization of profit.