The impact of risk management on the profitability of deposit money banks in Nigeria

Abstract

The study carried out the impact of risk management on the profitability of Deposit Money Bank in Nigeria. Fourteen commercial banking firms were selected on a cross sectional basis for 7 years. The specific objectives are to; examine the effect of loans and advances on the profitability of deposit money banks in Nigeria and assess the effect of non-performing loans on the profitability of deposit money banks in Nigeria. The researcher used secondary sources of data analysis which was obtained from CBN annual reports and bank supervisory reports. The data obtained were analyzed using descriptive and inferential statistical methods,
processed with the Statistical Packaged for Social Sciences (SPSS) version 26 software. Based on the findings, it was discovered that, the result of the regression coefficients indicates that the coefficient of Average Collection Period (NPL) is negative with (-.000) and has significant impact on ROTA (p>.05) of the sampled banks for the period of study. the result of regression
also revealed a negative relationship between NPL and ROTA which is significant (p<.05) for the sampled banks during the period of study. the study therefore recommends that banks should establish sound and competent risk management units and recruit well- motivated staff. Proper loan appraisal and follow-up, including very careful loan screening procedure and timely disbursement of approved loan should be undertaken by credit officers to reduce delinquencies and default.