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Financial Risk, Capital Adequacy and Liquidity Performance of Deposit Money Banks in Nigeria

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Financial Risk, Capital Adequacy and Liquidity Performance of Deposit Money Banks in Nigeria


Odinaka Frank Igbojindu | Gloria Ogochukwu Okafor | Chinedu Jonathan Ndubuisi



Odinaka Frank Igbojindu | Gloria Ogochukwu Okafor | Chinedu Jonathan Ndubuisi "Financial Risk, Capital Adequacy and Liquidity Performance of Deposit Money Banks in Nigeria" Published in International Journal of Trend in Scientific Research and Development (ijtsrd), ISSN: 2456-6470, Volume-8 | Issue-1, February 2024, pp.175-186, URL: https://www.ijtsrd.com/papers/ijtsrd61356.pdf

The objective of this study was to examine the effect of financial risk on liquidity performance of Deposit Money Banks (DMBs) in Nigeria, with capital adequacy as a moderator. The study specifically examined the mediating role of capital adequacy on the effect of operational risk, market risk and credit risk on liquidity performance. The study adopted the ex-post facto research design; as the goal was not to manipulate any variable but rather to establish effect and mediation. The population comprised listed Deposit Money Banks and the sample restricted to a purposive sample of ten (10) banks whose annual reports were accessible for the period of 13 years from 2010-2022 which was the time scope of this study. The data were analysed using structural equation model. The study found that capital adequacy does not significantly mediate the effect of operational, market and credit risks on liquidity performance. Based on these findings, the study recommended that: Banks need to create a capital adequacy mechanism necessary for hedging against operating risks inherent in the financial market; Banks need to develop a capital adequacy framework to guide them to optimally disclose their market risks, enhance the quality of their disclosure practices, improve the quality of their financial reports and more efficiently manage their liquidity; The Nigerian Central Bank need to develop a statutory requirement that will demand a certain level of capital adequacy by the banks before granting a certain level of credit.

Financial Risk, Capital Adequacy and Liquidity Performance


IJTSRD61356
Volume-8 | Issue-1, February 2024
175-186
IJTSRD | www.ijtsrd.com | E-ISSN 2456-6470
Copyright © 2019 by author(s) and International Journal of Trend in Scientific Research and Development Journal. This is an Open Access article distributed under the terms of the Creative Commons Attribution License (CC BY 4.0) (http://creativecommons.org/licenses/by/4.0)

International Journal of Trend in Scientific Research and Development - IJTSRD having online ISSN 2456-6470. IJTSRD is a leading Open Access, Peer-Reviewed International Journal which provides rapid publication of your research articles and aims to promote the theory and practice along with knowledge sharing between researchers, developers, engineers, students, and practitioners working in and around the world in many areas like Sciences, Technology, Innovation, Engineering, Agriculture, Management and many more and it is recommended by all Universities, review articles and short communications in all subjects. IJTSRD running an International Journal who are proving quality publication of peer reviewed and refereed international journals from diverse fields that emphasizes new research, development and their applications. IJTSRD provides an online access to exchange your research work, technical notes & surveying results among professionals throughout the world in e-journals. IJTSRD is a fastest growing and dynamic professional organization. The aim of this organization is to provide access not only to world class research resources, but through its professionals aim to bring in a significant transformation in the real of open access journals and online publishing.

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