Analyzing the Effect of Market Risks on Financial Performance of Listed Deposit Money Banks in Nigeria

Abstract

The study examines market risks as factors that could influence the financial performance of the DMBs in Nigeria. The study was based on the Value at Risks (VaR) theory and adopted the crosssectional and longitudinal research design. The population of the study consisted of all Deposit Money Banks (DMBs) in Nigeria. Data were collected from financial statements of the sampled banks. Findings of the study revealed that exchange rate risk has a significant negative effect on Return on Assets while interest rate risk was found to be positive but not significant. The study concludes that market risks affect the financial performance of DMBs in Nigeria, and recommends that bank managers should follow monetary policies when creating risk management plans, and policymakers should take into account the banking sector's recent financial performance, including interest rates and exchange rates, since the banking sector's success is a good indicator of economic performance.