Financial Risk Management and Bank Performance: An Evidence of Selected Nigerian Deposit Money Banks (Published)
The issue of financial risk management has been a burning issue throughout the banking industry in Nigeria especially in the wake of global financial crisis and the ensuing regulatory changes. Nigerian deposit money banks (NDMBs) face a number of financial risks which can impact their capacity to earn sustainable returns and financial sustainability to a large extent. It is thus necessary to understand the impact of these risks on financial performance in a bid to supervise banks and make managerial decisions in Nigeria. The paper explores the effect of financial risk on financial performance in NDMBs on an expo facto research design. The data were collected using secondary sources in the years between 2010 and 2022 and on selected NDMBs. The study utilised stratified sampling to identify the diversity of the NDMBs as 20 banks were purposively identified to participate in the study. The year 2010 was taken as the base year due to the fact that it was the year when the world came out of a global economic crisis and new risk and governance policies were implemented by the bank management and regulators. The information regarding the financial and bank performance was obtained through the Central Bank of Nigeria (CBN) reports and Annual Financial reports of the chosen banks. The data obtained was analysed with the help of proper descriptive and panel least square regression analysis methods. The results exhibited credit risks (CRR), cost-income ratio (CIR), total regulatory capital (TRC), and bank size (SIZE) as factors influencing financial performance through both return on assets (ROA) and return on equity (ROE). CRR showed a negative coefficient value of 0.0002 and probability of 0.0419, LQR has a negative coefficient value of 0.0594 which is statistically significant (p-value = 0.0498), CIR (coefficient = -0.0281 and probability = 0.0106), TRC with a positive coefficient value of 0.0358 on the level of ROA which is statistically significant (p-value = 0.0457), and SIZE showed a coefficient value of 0.0088 which is statistically significant (p-value = 0.0210). While CRR negatively and significantly influenced ROE with a negative coefficient value of 0.0039 and probability of 0.0254, LQR had a positive coefficient value of 0.0867 on ROE which is statistically significant (p-value = 0.0317), CIR (coefficient = 0.0785 and probability = 0.0472), SIZE is significantly influenced the returns with coefficient value of 0.097 and probability of 0.0016. The study concludes that financial risk management significantly influences financial performance of NDMBs. The study recommends that banks must observe strict compliance with regulatory positions on lending and ensure that their credit risk management is tailored towards generating sufficient earnings that will improve financial performance. Also, bank management must endeavor to have a robust risk management strategy that incorporates global best practices so as to improve their financial performance and be better prepared for economic challenges.
Keywords: Financial Performance, Nigerian deposit money banks, financial risk management
Internet Financial Reporting and Corporate Governance Mechanisms: Empirical Evidence on the Financial Performance of Firms Listed on the Nigeria Exchange Group (Published)
Internet Financial Reporting (IFR) has become an important tool in increasing transparency, accountability and timely reporting of financial information and corporate governance mechanisms (CGMs) is important in the efforts of harmonising the actions of the managers with the interests of the shareholders. Though IFR and governance reforms are becoming increasingly popular in Nigeria, very little empirical information is available regarding the joint impact of these two on the performance of the quoted companies. The research design was longitudinal research with the basis of secondary data. There were 151 quoted companies on the Nigeria Exchange Group (NGX) that comprised 47 financial and 104 non-financial companies and this was over the period 2012 to 2023. Out of this population, 56 sampled companies (45 non-financial and 11 financial companies) were sampled purposively on information available and adhering to International Financial Reporting Standards (IFRS). The year 2012 was selected as a base year since this was the year when quoted companies in Nigeria adopted the IFRS. The published and audited corporate filings and financial statements were used to source data. Measurements of the IFR, CGMs, and financial performance (return on assets, return on equity, and return on capital employed), and control variables were used as the variables. The analysis of data was performed with the help of descriptive statistics and generalised method of moment (GMM) estimation technique. The results found that IFR and CGMs had positive influence on financial performance. To be more precise, the joint IFR and CGMs yielded a value of coefficient of 35.854 on the return on assets, 43.085 on the return on equity and 37.832 on the return on capital employed. The three effects were statistically significant as their p-values were 0.428, 0.164 and 0.341 respectively, which means that better internet-based financial disclosure and effective mechanisms of governance are related to better financial performance of quoted companies in Nigeria. The paper concludes that IFR and CGMs are a significant improvement in the financial performance of the quoted companies in Nigeria through a better use of transparency and accountability, as well as stakeholder engagement. The recommendation that the quoted companies in Nigeria should still use IFR as a strategic tool of enhancing transparency and strengthening stakeholder relationship by making regular and convenient online disclosures of their financial results is recommended. Boards also ought to review unnecessary or ineffective meetings and channel them into strategy purposes, especially those concerning the quality of disclosure and performance improvement. In addition, the use of IFR by quoted companies should be motivated and as needed required by the regulatory bodies like the Financial Reporting Council of Nigeria (FRCN) and the Securities and Exchange Commission (SEC) so that the practise of disclosure is unified, and investor confidence is increased as a result, and the overall performance of the corporate sector is positively impacted.
Keywords: Corporate Governance Mechanisms, Financial Performance, Nigerian quoted companies, internet financial reporting
Effect of Credit Risk Management on the Financial Performance of Deposit Money Banks in Nigeria (Published)
This study examined the effect of credit risk management on the financial performance of Deposit Money Banks in Nigeria. Specifically, it analyzes the impact of Non-Performing Loans (NPL), Loan Loss Provision (LLP), and Capital Adequacy Ratio (CAR) on Return on Assets (ROA). The study used secondary data from 2014 to 2023 and applied Panel Ordinary Least Squares (OLS) multiple regression for analysis. The findings reveal that NPL has a negative and significant effect on ROA, with a coefficient of -0.031054, a t-statistic of -2.954064, and a p-value of 0.0044. This means that an increase in NPL reduces bank profitability. LLP has a positive and significant effect on ROA, with a coefficient of 0.006245, a t-statistic of 6.092986, and a p-value of 0.0000, showing that higher loan loss provisions improve financial performance. CAR also has a positive and significant effect on ROA, with a coefficient of 0.031904, a t-statistic of 2.189893, and a p-value of 0.0321, indicating that banks with higher capital adequacy perform better. The model explains 44.44% of the variation in ROA, as shown by the R² value of 0.444412. The F-statistic of 12.99828 and its p-value of 0.000000 confirm that the overall model is statistically significant. This study contributes to knowledge by examining these three credit risk factors together, filling gaps in past research. The findings provide valuable insights for bank managers, regulators, and policymakers on how to improve bank stability and profitability through better credit risk management.
Keywords: Capital Adequacy Ratio, Credit Risk Management, Deposit Money Banks, Financial Performance, Loan Loss Provision, Non-Performing Loans, Return on Assets
Impact of CBN Cash Reserves Requirement on the Financial Performance of Deposit Money Banks in Nigeria (Published)
This study investigates the impact of the Central Bank of Nigeria’s (CBN) Cash Reserve Requirement (CRR) on the financial performance of Deposit Money Banks (DMBs) in Nigeria, focusing on Return on Assets (ROA), Return on Equity (ROE), Liquidity Rate (LR), and Loan-to-Deposit Ratio (LDR). Anchored in Monetary Theory and Resource Dependence Theory, the study employs an ex-post facto research design and utilizes secondary data from 2018 to 2023. Descriptive statistics, correlation analysis, and simple regression analysis were applied to examine the relationships between CRR and the performance metrics. Findings reveal that CRR significantly influences all four metrics, demonstrating a strong positive relationship with ROA, ROE, LR, and LDR. These results highlight the dual role of CRR in promoting financial stability and influencing operational strategies in the banking sector. The study concludes that while CRR enhances regulatory compliance and liquidity, it also imposes constraints on lending and profitability, necessitating adaptive strategies by banks. Policymakers are advised to balance CRR adjustments to optimize liquidity control and profitability, ensuring alignment with Nigeria’s economic development goals.
Keywords: Deposit Money Banks, Financial Performance, Loan to Deposit Ratio, Return on Assets, Return on Equity, cash reserve requirement, liquidity rate
Corporate Social Responsibility Expenditures on Financial Performance of Zenith Bank Nigeria PLC (Published)
The study explores the influence of CRS expenditure on the financial performance of Zenith Bank PLC in Nigeria between 2015 and 2024. There has been increased pressure for corporate social responsibility activities from various stakeholders and this has made it more relevant for banks to engage in such activities. Nevertheless, the Nigerian banks’ context remains unfamiliar with the link between CSR and financial performance, hence limiting the strategic relevance of these expenses. This qualitative study uses secondary data from financial statement of Zenith Bank for the years 2015 to 2024 sourced from the Central Bank of Nigeria. Linear regression analysis, with the aids of SPSS 28, were conducted with the aim of establishing the association of the CSR during all the three financial performance aspects, namely, the annual gross income, the annual taxable income, as well as the annual market value per share. The findings indicate the existence of positive and significant relationships that are noteworthy for all the variables on performance respectively. The linear regression analysis indicates that infrastructure directs 65.2% of the variation in the market value of the shares of 8.3% (R² = 0.652; p = 0.005), 47.0% of the variance in the annual before tax profits of Zenith bank Plc (R² = 0.470; p = 0.029), and 41.7% of the variance in annual revenues (R² = 0.417; p = 0.044). All the aforementioned relationships were statistically significant with 95% confidence limit, with the maximum effect observed for market value per share, follow by profit before tax, and least for gross revenue. The study therefore recommends, among others, that Zenith bank should invest in CRS activities that increase the awareness of the brand or company and confidence credentials of the key stakeholders.
Keywords: Corporate Social Responsibility, Financial Performance, corporate social responsibility expenditure, gross revenue, market value per share, profit before tax
Effect of Pension Fund Characteristics on Financial Performance of Pension Fund Administrators in Nigeria (Published)
This study examined the effect of pension fund characteristics on the financial performance of Pension Fund Administrators in Nigeria. It is necessitated by the limited empirical evidence on the specific factors influencing the financial performance pension fund administrators, given the growing importance of pension funds in Nigeria’s capital markets. Using an ex-post facto research design, the study analyzes data from 6 pension fund administrators selected from a population of 21, covering the period 2010 – 2024. The study employs correlation and multiple regression analyses to assess the relationships between corporate age, corporate expenditure, corporate revenue, investment growth, and financial performance, measured by Return on Capital Employed (ROCE). The findings reveal that corporate age, corporate revenue, and investment growth have significant positive effects on financial performance, while corporate expenditure exhibits a significant negative impact. The regressors of the study explain 86.8% of the variance in financial performance, indicating strong predictive power. These results suggest that older, more established pension fund administrators with robust revenue streams and effective investment strategies tend to perform better financially, whereas higher operational costs detract from performance. The study concludes that institutional experience, revenue generation, and investment expertise are critical drivers of financial success in Nigeria’s pension sector, while cost management remains a key challenge. Based on these findings, the study recommends that pension fund administrators should focus on optimizing revenue streams, enhancing investment frameworks, and implementing stringent cost-control measures. Regulatory authorities should also strengthen oversight mechanisms to ensure sustainable financial performance.
Keywords: Age, Expenditure, Financial Performance, Revenue, investment growth
Accounts Receivable Management and Financial Performance of Public Universities in Ghana (Published)
This study examines how accounts receivable management affects the financial performance of public universities in Ghana. Utilizing secondary data from 13 public universities over five years (2017–2021), the research employs descriptive statistics, correlation analysis, and regression models to evaluate key financial metrics, including Return on Assets (ROA), Current Ratio (CUR), Accounts Receivable Turnover (ART), and Accounts Receivable Period (ARP). Key findings indicate a moderate positive correlation between ROA and CUR, a strong positive correlation between ROA and ART, and a negative correlation between ARP and ROA, emphasizing the importance of timely collections. Additionally, larger universities tend to have better financial performance, as shown by the positive influence of university size on both ROA and CUR. The study concludes that while some universities manage finances effectively, significant variability highlights the need for improved practices. These insights are valuable for university administrators and policymakers aiming to enhance financial performance in Ghana’s higher education sector.
Keywords: Financial Performance, Liquidity, Return on Assets, accounts receivable management, accounts receivable period, accounts receivable turnover
Green Financing, Corporate governance and Financial Performance of Commercial Banks in Kenya: A Review of Literature (Published)
This research examines the interplay between green financing and the financial performance of commercial banks in Kenya, with a particular focus on the role of corporate governance as a moderating variable. Green financing refers to the investment of financial resources in projects that foster environmental sustainability. As concerns regarding environmental issues grow globally, financial institutions are progressively incorporating green financing into their operational frameworks. This study aims to assess the implications of such practices on the financial stability and competitive positioning of banks within the Kenyan market. Through a comprehensive review of scholarly articles, reports from the Kenya Bankers Association, and various working papers accessed via Google Scholar, the findings indicate a favorable relationship between green financing initiatives and enhanced financial performance. Furthermore, the analysis highlights a general agreement among numerous studies that corporate governance plays a mediating role in the relationship between green financing and the financial outcomes of commercial banks. These findings emphasize the critical significance of adopting sustainable banking practices to bolster profitability while simultaneously advancing environmental sustainability.
Keywords: Financial Performance, green financing, lending in commercial banks., sustainability financing
Moderating Role of Firm Size on Carbon Accounting and Financial Performance of Listed Firms in Nigeria (Published)
This study investigates corporate carbon accounting and financial performance of listed manufacturing firms in Nigeria. The study used quantitative research design and data were collected from primary and secondary sources. The primary data comprised of structured questionnaire from a sample of 312 accountants in listed manufacturing firms in Nigeria. Data collected from the respective respondents were analysed by applying structural equation modelling through the employment of SmartPLS version 4. The findings from the data analysis suggested a positive and insignificant relationship between scope of carbon emissions, emission sources, emission categories and emission factors positively and insignificantly impact on return on assets of listed manufacturing firms in Nigeria. Also reporting boundaries and firm size negatively and insignificantly influence return on assets. On the basis of the findings, the study concluded that carbon emission accounting influences the financial performance of listed manufacturing firms in Nigeria. Hence, the study recommended amongst others that managers of listed manufacturing firms should consider carbon mitigation strategies seriously since carbon emissions negatively influence shareholder value. This means that managers can enhance shareholders’ value by undertaking emission abatement policies to boost their financial and market performance.
Keywords: Carbon Accounting, Emission Sources and Factors, Financial Performance
Influence of Non-Performing Loans, Lending rate and Financial Performance of Commercial Banks in Kenya. A Review of the Literature (Published)
This study examined the impact of non-performing loans on the financial performance of publicly listed commercial banks in Kenya, focusing on the bank lending rate as a mediating variable. It analyzed the relationship between non-performing loans and banks’ return on assets (ROA) and return on equity (ROE) through a review of empirical literature from Google Scholar and the Central Bank of Kenya reports. Studies show mixed results on the relationship between non-performing loans (NPLs) and bank performance. Previous studies have highlighted an inverse relationship between non-performing loans and return on assets (ROA), as noted by Siddique et al. (2022) and others. On the other hand, Mrindoko et al. (2020) discovered a negligible negative correlation with return on assets. Generally, the literature suggests an inverse relationship between NPLs and bank performance, emphasizing a diversified loan portfolio for improved profitability. Researchers have noted connections between NPLs and lending rates (Case et al., 2023; Rahmananingtyas, 2022; Koskei & Samoei, 2024), as well as between lending rates and bank performance (Hania & Himel, 2023; Dondi & Mule, 2023). This hypothesis suggests that lending rates play a mediating role in the relationship between non-performing loans (NPLs) and the financial performance of commercial banks in Kenya, highlighting the need for additional empirical research in this area.
Keywords: Financial Performance, Lending Rate, Non-Performing Loans, Return on Assets, Return on Equity