The Effects of Corporate Risk on Financial Performance: Evidence from Listed Deposit Money Banks in Nigeria
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Date
2017-06
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Faculty of Management Sciences, University of Ilorin, Ilorin, Nigeria
Abstract
This study assesses the effect of corporate risk on financial performance of listed Deposit Money Banks in Nigeria for the period of 2011-2016. The population of the study based on the availability of data in the Nigerian Stock Exchange is fourteen (14) listed Deposit Money banks. The study adopted Census sampling technique of which all the fourteen (14) Banks were studied. Corporate risk as the independent variable was proxied with liquidity risk, credit risk, operating risk and bank size, while the return on asset was used to proxy financial performance. Data were collected from secondary source through the annual reports of the banks for the period under study and the data was analysed using panel regression techniques. The findings reveal that liquidity risk has an insignificant negative effect on the financial performance of the study banks, while the credit risk and operating risk has a significant negative effect on financial performance respectively. The bank size has a significant positive effect on financial performance of listed Deposit Money Banks in Nigeria. It is recommended among others that the banks should regulate their liquidity risk position and ensure they minimize the non-performing loan as it has been found empirically to reduce the quality of the firm’s financial performance. They should also reduce their operational cost for better performance.
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Keywords
Corporate Risk, Financial Performance, Listed deposit money banks