RISK MANAGEMENT AND INVESTORS VALUATION OF DEPOSIT MONEY BANKS IN NIGERIA

Abstract

This study examines the effect of risk management and investors valuation of deposit money banks in Nigeria from 2013-2021. The intent of the study was to determine whether risk management mechanism: deposit to equity, loan to equity and loan to deposit have effect on the investors valuation of Deposit money banks measured by returns on equity (ROE). The expos-facto design was adopted in this study simply because of the fact that the study was experimental. The data for this study were obtained from secondary sources. Specifically, annual time series data of the variables such as: Returns on Equity (ROE), Deposit to Equity (DTE), Loan to Equity (LTE) and Loan to Deposit (LTD). The data were sourced from the annual reports of deposit money banks in Nigeria listed on the floor of the Nigerian Stock Exchange (NGX) as at 2022. The investors valuation was proxy with ROE. The judgmental sampling technique was adopted. The time series data were collected from the year 2013 to 2021. The descriptive statistics, multiple linear regression model, R-Square, Adjusted R-Square, t-Statistic (t-Stat), Durbin-Watson (DW) Statistic and P-value were used to analyze the data collected and to test the hypotheses stated. The level of significance used was 5%. The analysis was done using SPSS tool. The study therefore concluded that deposit money banks in Nigeria have a high growth rates on loans and advances, with corresponding high rate of non-performing loans by customers. The study recommended that recommended that the central bank of Nigeria should investigate all registered deposit money banks if their bank policy is terms with what is stipulated under the commission guidelines, more also, the stringent policy of the deposit money banks which makes it most difficult for them to indemnify the individual who was suffered from the registered losses should be reviewed. Training of qualified personnel staff should as well be encouraged.