Risk Management Practices and Financial Performance Among Deposit Money Banks in Nigeria

Oluwaseyi Ayodele (PhD) Adedipe and Praise Oluwatobiloba Adeyemi
Additional contact information
Oluwaseyi Ayodele (PhD) Adedipe: Department of Accounting and Finance, Faculty of Management Sciences, Ajayi Crowther University, Oyo
Praise Oluwatobiloba Adeyemi: Department of Accounting and Finance, Faculty of Management Sciences, Ajayi Crowther University, Oyo

International Journal of Latest Technology in Engineering, Management & Applied Science, 2025, vol. 14, issue 5, 901-914

Abstract: The banking sector in Nigeria plays an important role in the nation's financial ecosystem and is a major driver of economic growth and development. However, despite this essential role, Nigerian banks are exposed to a wide range of risks that can significantly impact their financial stability and overall performance. This study investigated the effect of credit risk management on the financial performance of deposit money banks in Nigeria, using panel data from five selected banks. Employing both Random and Fixed Effects models, the research evaluated how credit risk influences financial performance, with Return on Assets (ROA) serving as the key performance indicator. The findings revealed a positive and significant relationship between credit risk and ROA, indicating that higher credit risk levels are associated with improved financial outcomes. This underscores the importance of robust credit risk management and well-structured governance frameworks in driving financial performance. The study concluded that credit risk can positively impact market-based performance, as investors may perceive higher risk as a signal of greater potential returns. It emphasized the importance of robust risk management practices and governance mechanisms in sustaining long-term financial health. Consequently, the study recommended that banks strengthen their credit risk management frameworks, promote a culture of transparency and ethical behavior, and conduct regular reviews of governance structures to ensure alignment with evolving regulatory and market conditions.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.ijltemas.in/DigitalLibrary/Vol.14Issue5/901-914.pdf (application/pdf)
https://www.ijltemas.in/papers/volume-14-issue-5/901-914.html (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bjb:journl:v:14:y:2025:i:5:p:901-914

Access Statistics for this article

International Journal of Latest Technology in Engineering, Management & Applied Science is currently edited by Dr. Pawan Verma

More articles in International Journal of Latest Technology in Engineering, Management & Applied Science from International Journal of Latest Technology in Engineering, Management & Applied Science (IJLTEMAS)
Bibliographic data for series maintained by Dr. Pawan Verma ().