Bank specific risk and performance: evidence from Nigeria
DOI:
https://doi.org/10.33003/fujafr-2026.v4i2.348.65-73Keywords:
Bank-specific risk, Regulatory compliance, Operational performance, Credit risk, Bank performanceAbstract
Purpose: This study examines the influence of bank-specific risk governance and regulatory compliance on the operational performance of Deposit Money Banks (DMBs) in Nigeria over 2015–2024.
Methodology: Secondary panel data for five systemically important DMBs — Access Bank, Zenith Bank, GTCO, First Bank, and UBA — were analysed over a ten-year period. Operational performance is proxied by Return on Assets (ROA). Risk governance predictors include credit risk, liquidity risk, operational risk, regulatory compliance, and bank size as a control variable. Pooled OLS, fixed effects, and random effects panel models were estimated, with the Hausman test selecting the preferred estimator.
Results and conclusion: The findings reveal that credit risk exerts a significant negative influence on bank performance, while effective liquidity management and strong regulatory compliance significantly improve performance. Operational risk shows a marginal negative effect. Regulatory compliance emerges as the dominant predictor, affirming that governance quality — beyond mere regulatory adherence — is the primary driver of sustainable profitability among Nigerian DMBs.
Implication of findings: Policymakers and bank boards should prioritize embedding genuine compliance culture as a strategic performance lever. The CBN should pair recapitalization directives with standardized governance scorecards to reinforce market discipline.
References
Adedipe, O. A., & Adegbite, S. T. (2026). The interplay of risk management and tax strategies: an analysis of Nigerian public companies (2013-2022). FUDMA Journal of Accounting and Finance Research [FUJAFR], 4(1), 224-238. https://doi.org/10.33003/fujafr-2026.v4i1.332.224-238 DOI: https://doi.org/10.33003/fujafr-2026.v4i1.332.224-238
Adegoke, M. (2025). Operational risk management practices and performance: Evidence from non-interest listed deposit money banks in Nigeria. Journal of Financial Risk Management, 14(2), 45–67.
Adeyinka, A., & Henry, B. (2024). Risk management and performance of Nigerian deposit money banks: A retrospective analysis (2010–2022). Nigerian Journal of Banking and Finance, 12(1), 78–96.
Aigbe, P., & Umobong, A. (2024). Enterprise Risk Management and Financial Performance of Nigerian Deposit Money Banks: The Moderating Role of Corporate Governance. Vol-10 Issue-2 2024 IJARIIE-ISSN(O)-2395-439.
Akintoye, I., & Awosika, E. (2021). Liquidity management and bank profitability in Nigeria. Journal of Finance and Bank Management, 9(2), 1–14.
Atkins, L. (2025). Protecting The Poor: Financial Distress In Credit Unions. Retrieved from https://digitalcommons.pvamu.edu/pvamu-dissertations/128
Badaki, T. J., Gugong, B. K., & Dauda, I. (2026). Non-Performing Loans and Financial Performance of Listed Deposit Money Banks in Nigeria. KASU Journal of Accounting Research and Practice, 11(1).
Basel Committee on Banking Supervision (BCBS). (2023). Principles for operational resilience and effective risk data aggregation. Bank for International Settlements.
Committee of Sponsoring Organisations (COSO). (2017). Enterprise risk management — Integrating with strategy and performance. COSO Publications.
Elee, C. (2025). Financial risk management and financial performance of Nigerian deposit money banks. West African Journal of Finance, 8(1), 34–52.
Esechie, E. T. (2025). Financial Risk Management and Deposit Money Banks' Performance in Nigeria: A Theoretical Review. International Journal of Finance, Accounting and Management Studies, 1(8), 308–326.
Fadun, O. S., & Oye, D. (2020). Impacts of operational risk management on financial performance: a case of commercial banks in Nigeria. International Journal of Finance & Banking Studies, 9(1), 22–35. https://doi.org/10.20525/ijfbs.v9i1.634 DOI: https://doi.org/10.20525/ijfbs.v9i1.634
Hamdan AL Mamari, Ahad Said AL Ghassani, Essia Ries Ahmed (2022). Risk Management Practices and Financial Performance: The Case of Sultanate of Oman. https://doi.org/10.21070/jas.v6i1.1596 DOI: https://doi.org/10.21070/jas.v6i1.1596
Hemrit, W., Kasraoui, N., & Feidi, A. (2026). Bank performance — what are the main roles of the human capital and asset diversification? Evidence from France. EuroMed Journal of Business, 21(1), 234–262. DOI: https://doi.org/10.1108/EMJB-08-2023-0218
Markowitz, H. (1952). Portfolio selection. Journal of Finance, 7(1), 77–91. DOI: https://doi.org/10.1111/j.1540-6261.1952.tb01525.x
Mrindoko, A. E. (2021). Effect of Credit Risk and Operational Risk on the Financial Performance of Commercial Banks in Tanzania (Doctoral dissertation, The Open University of Tanzania).
Musa Mohammed Naburg, Yahaya Abdullahi Osheka, Umar Doshiro, & Liman Alhaji. (2025). Operational Risk and Value of Listed Deposit Money Banks in Nigeria. FULafia International Journal of Business and Allied Studies, 3(3), 84–103.
Obaka, S. E., & Sunday , S. (2025). Enterprise Risk Management and Financial Performance of Nigerian Deposit Money Banks (2014-2022) . FUDMA Journal of Accounting and Finance Research [FUJAFR], 3(3), 243-254. https://doi.org/10.33003/fujafr-2025.v3i3.228.243-254 DOI: https://doi.org/10.33003/fujafr-2025.v3i3.228.243-254
Ogundele, F., & Nzama, T. (2025). Risk management practices, disclosures and financial performance: Evidence from Nigerian commercial banks. Journal of African Business, 26(1), 98–116.
Olowofela, O. E., Donfack, H.A., & Soh, C. W. (2025). Corporate Governance Mechanism and Bank Performance, New Insights from Emerging Economy: Evidence from Nigeria Banking Sector. Journal of Risk and Financial Management, 18(2), 92. DOI: https://doi.org/10.3390/jrfm18020092
Oluwagbade, O. I., Dagunduro, M. E., Dada, S. A., & Awotomilusi, N. S. (2023). Effect of risk management committee structure on financial performance of listed financial institutions in Nigeria. Migration Letters, 20(10), 279–298.
Peykani, P., Sargolzaei, M., Tanasescu, C., Shojaie, S. E., & Kamyabfar, H. (2025). Investigating the Relationship Between Liquidity Risk, Credit Risk, and Solvency Risk in Banks Listed on the Iranian Capital Market. Economies, 13(5), 139. DOI: https://doi.org/10.3390/economies13050139
Rabiu, N. A. B. (2025). Corporate governance and economic development in Nigeria: a synthesis of literature. Governance and Economic Development in Nigeria, 88.
Sallau, M. M. (2025). The Impact of Corporate Governance Attributes on Tax Planning of Listed Deposit Money Banks in Nigeria: Corporate Governance and Tax Planning. FUDMA Journal of Accounting and Finance Research [FUJAFR], 3(3), 115-128. https://doi.org/10.33003/fujafr-2025.v3i3.211.115-128 DOI: https://doi.org/10.33003/fujafr-2025.v3i3.211.115-128
Sanusi, L. S. (2022). Banking sector reforms and the Nigerian economy: A retrospective assessment. CBN Journal of Applied Statistics, 13(1), 1–32.
Ugbaja, O. C. (2025). Assessing the Effectiveness of Risk Management Strategies in Mitigating Financial Distress: A comparative study of Nigerian Banks and Non-Bank Financial Institution. International Journal of Scholarly Resources, 17(2).
Yahaya, A. (2024). The impact of risk management committee on firm risk, with risk management practices as a mediator. Journal of Corporate Finance Education, 11(13), 121–172. DOI: https://doi.org/10.2139/ssrn.5020430
Yahaya, O. A. (2026). Credit risk governance and financial stability in Nigeria. Journal of Economics and Finance.
Yahaya, O. A. (2026). Financial technology adoption and financial stability of listed deposit money banks in Nigeria. Journal of Banking and Finance Studies, 12(3), 12–43.
Downloads
Published
Issue
Section
License
Copyright (c) 2026 Anthony Oyamendan, Debo-Ajagunna Adebolanle, Adepoju Adeoba Asaolu, Babatunde Afolabi
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
The FUDMA Journal of Accounting and Finance Research (FUJAFR) operates a copyright policy that ensures a balance between author rights and wide dissemination of scholarly work.
1. Author Copyright Retention
Authors retain full copyright of their published work without restriction. Submission to FUJAFR does not transfer ownership of copyright to the journal.
2. License to Publish
By submitting a manuscript and upon acceptance, authors grant FUJAFR:
- The right to publish, reproduce, and distribute the article
- The right to identify itself as the original publisher of the work
This grant is non-exclusive, meaning authors are free to reuse their work in other contexts, provided proper acknowledgment of the original publication in FUJAFR is made.
3. Licensing of Published Content
All articles are published under the:
Creative Commons Attribution-NonCommercial License (CC BY-NC 4.0)
Under this license:
- Users may share and adapt the work for non-commercial purposes only
- Proper attribution to the author(s) and the journal is required
- Any commercial use requires explicit permission from the copyright holder
4. Author Reuse Rights
Authors are permitted to:
- Archive their published articles in institutional repositories or personal websites
- Share their work for educational and research purposes
- Reuse portions of their work in future publications (e.g., books or other articles), provided proper citation of the original publication is included
5. Third-Party Content
Authors are responsible for obtaining permission to use any third-party copyrighted material (e.g., images, tables, datasets) included in their manuscripts. Proper acknowledgment must be provided where required.
6. Attribution Requirement
All users of FUJAFR content must provide appropriate credit, including:
- Author name(s)
- Article title
- Journal name (FUJAFR)
- Year of publication
