Impact Of Risk Management On Profitability Of Banks :- Johnson Ihuoma Q

ABSTRACT

The study carried out an empirical investigation into the impact of risk management on the profitability of banks in Nigeria over the period of 18 years (2000-2017). Bank profitability was proxied by return on assets while risk management was measured by non-performing performing loans ratio, loan and advances to deposit ratio and changes in interest rate. Multiple regression analysis was used for the data analysis. The results showed that the impact of risk management on banks profitability was significant. Specifically, the impact of non-performing loans on return on assets was negative and significant, while the impact of interest rate and loans and advances to deposit ratio was positive and insignificant. Based on our findings, it is recommended that banks in Nigeria should enhance their capacity in credit analysis and loan administration while the regulatory authority should pay more attention to banks’ compliance to relevant provisions of the Bank and other Financial Institutions Act (1999) and prudential guidelines