Tag Archives: Returns on Assets

Risk Management, Risk Concentration and the Performance of Deposit Money Banks in Nigeria (Published)

This study investigated the effect of risk management and risk concentration 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 risk management/concentration, and return on assets as the measure for 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 risk management/concentration 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.

Keywords: Credit, Liquidity, Performance, Returns on Assets, Risk Management, capital adequacy