RISK MANAGEMENT AND CORPORATE PERFORMANCE: PANEL EVIDENCE OF NIGERIAN BANKING SECTOR
The purpose of this study is to examine the relationship between risk management practices and corporate performance of a sample of Nigerian banks in a longitudinal setting, from 2006-2009. Statistical analysis such as descriptive analysis, correlation analysis and panel data regression model are employed to analyze the data and to seek support for the hypotheses. The results based on the panel data regression analysis, revealed that credit risk variable is negatively and significantly related to bank corporate performance proxy by ROA and ROE implying that the greater the exposure of these banks to high risk loans, the higher the accumulation of unpaid loans and the lower the profitability of these banks. Beside, the result also show that liquidity risk affect the return on equity positively. However, the result from the study shows that interest rate risk does not have impact on the corporate performance of the banks. Overall, the result emphasize the need for Nigerian banks to focus more on credit risk management which have been found to be challenging in recent past as it is indeed very important and central to the health of the banks and the entire banking system.
