Risk Management Strategies and Financial Performance in Deposit Money Banks Listed on the Nigerian Exchange Group
This study investigated the effect of risk management strategies on financial performance of listed deposit money banks in Nigeria. Where liquidity risk, interest risk and foreign exchange risk used as proxies for independent variables while returns on assets used as proxy for dependent variable and firm size was control variable. Risk management strategies are very important for the prospect of any firm to improve the firm financial performance. This study employed ex-post facto research design and secondary data was collected from the financial reports of 11 listed deposit money banks for a period spanning 2011 to 2020. The data collected was analyzed through the means of Hausman test that was conducted to determine the best model between random effect and fixed effect, the result of Hausman test shows that random effect is the most appropriate model to determine whether there is statistical effect among the variables. The finding shows that rise in liquidity risk of the firm will bring about decrease in the firm financial performance and decline in interest rate risk will lead to rise in financial performance, interest risk has negative effect with returns on assets and that increase in foreign exchange risk leads to fall in financial performance of the banks. The study recommended that deposit money banks should strengthen their risk management strategies by employing capable teams and new strategies that follow the rules put in place by the Central Bank of Nigeria.
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