Business Risk Management and the Performance of Deposit Money Banks in Nigeria | Chapter 05 | Current Perspective to Economics and Management Vol. 3
This study investigated the effect of
business risk management on the performance of Deposit Money banks in Nigeria
for the period 1997 to 2016. The study adopted credit risk, liquidity risk and
capital adequacy risk as proxies for business risk management and return on
assets as the measure of performance of Deposit Money banks. Secondary data was
collected from the annual financial statements of listed banks and the Nigerian
Stock Exchange fact book. The study employed multiple regression technique
based on the E-views 7 software for analysis of data. The results of the
analysis indicated that credit risk and liquidity risk had positive and
significant effect on return on asset, while capital adequacy risk had negative
and insignificant effect on return on asset. The study concluded that business
risk management affected the performance of banks in Nigeria. Based on the
findings, the study recommended that the management of banks should establish
sound lending policies, adequate credit administration procedure, and effective
and efficient machinery to monitor the lending function in line with
established guidelines. Also, the character and financial statement of the
borrower must be properly scrutinized and a careful evaluation of the
customer’s credit worthiness be carried out before extending loan facilities to
potential borrowers.
Author(s) Details
Dr. Lyndon M. Etale
Department of Accountancy,
Faculty of Management Sciences, Niger Delta University, Wilberforce Island,
Bayelsa State, Nigeria.
Lucky E. Ujuju
Department of Banking and
Finance, Delta State Polytechnic, Ozoro, Delta State, Nigeria.
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