EFFECT OF FINANCIAL RISK MANAGEMENT ON FINANCIAL PERFORMANCE BY LISTED DEPOSIT MONEY BANKS IN NIGERIA

Abstract

In the banking sector, risk management is growing daily as a result of the increasingly unstable economic environment. Even while banks are becoming more and more important to the nation's development, the governing bodies of these organizations nonetheless face several risks. It is widely believed that risk management is the key to any financial institution's success or failure. The study investigated how financial risk affects Nigerian listed banks' financial performance as well as the relative worth of the most common forms of risk. From 2018 to 2022, six of Nigeria's fourteen listed deposit money banks were sampled through purposive sampling technique. Data was gathered from the annual report and accounts of the sampled banks. As an alternative, bank performance and risk measurements were measured using the most used variable of ROA. There have been four types of financial risk used: liquidity, operating, exchange rate and capital risk. The results of regression analysis showed that the association between operating risk, exchange rate risk, and bank performance is positive and insignificant while that of liquidity risk and capital risk were negative on return on assets but only liquidity was significant. The study recommended that in order to boost the return on assets of listed deposit money banks in Nigeria, management of these banks have to reduce their liquidity risk and their capital risk.