Effect of Risk Management on the Financial Performance of Money Deposit Banks in Nigeria

This study examined the effect of risk management on the financial performance of Deposit Money Banks (DMBs) in Nigeria. The specific objectives include ascertaining the relationship between interest rate risk and return on equity and finding out the influence of interest rate risk on the return on asset. An ex-post facto research design was adopted for the study. Secondary data were obtained from the annual report and accounts of five different commercial banks. The data were analyzed using panel data regression of E-views 12.0. At the end of the study, it was found that there is a moderate influence of interest rate on the financial performance of these deposit banks and that at 5% level of significance, interest rate was found to have a positive and statistically significant effect on all the proxies of financial bank performance (such as return on equity and return on assets) of deposit money banks in Nigeria. Based on these findings, we concluded that risk management has significant positive effect on financial performance of Deposit money banks (DMB) in Nigeria. It was recommended, among other things, that credit and interest rate management and regulatory tightening are crucial in ensuring reduced interest rate risk and improved performance of DMBs in Nigeria.