Risk Management and Sustainability of Deposit Money Banks in Nigeria

C Ike R and M. O Anuolam
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C Ike R: Admiralty University of Nigeria, Department of Accounting, Business Administration and Economics, Faculty of Arts, Management and Social Sciences
M. O Anuolam: Admiralty University of Nigeria, Department of Accounting, Business Administration and Economics, Faculty of Arts, Management and Social Sciences

International Journal of Research and Innovation in Social Science, 2023, vol. 7, issue 5, 352-362

Abstract: This study investigated the nexus between risk management and the sustainability of banks in Nigeria by means of expost-facto research design. Risk management measures of non-performing loan-to-total loans, loan-loss provision-to-total loans and bad debt-to-total loans and sustainability measure of equity-to-asset ratio of banks were obtained from the annual reports and accounts of banks and Central Bank of Nigerian statistical bulletin during the period 2007-2017. The data obtained were analyzed using both descriptive (mean, standard deviation, minimum, maximum values, normality and correlation tests) and inferential (linear regression) statistical techniques. Based on the analysis, a nexus between risk management measures (non-performing loan-to-total loans loan-loss provision-to-total loans and equity-to-asset ratio of banks) and sustainability measure (equity to asset ratio of banks) in Nigeria was found. On the basis of the findings, it was recommended among others that bank management as well as the regulatory framework of the banking subsector should devise risk management strategies or measures aimed at curbing or reducing the level of non-performing loans so as to further sustain banks and make them going concern. As a matter of fact and urgency, the loan loss provision of banks should be further reviewed such that banks are made to reduce their loan losses in every financial period.

Date: 2023
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