Systematic Risk Management And Corporate Profitability: The Study of Deposit Money Bank in Nigeria

Abstract

This study examined the relationship between systematic risk management and corporate profitability of Nigerian deposit money banks from 2014 to 2019. Using an ex-post-facto and longitudinal research design, secondary data from five selected banks were analysed through multiple regression analysis, with Return on Assets (ROA) as the dependent variable and Degree of Operating Leverage (DOL), Degree of Financial Leverage (DFL), and Capital Adequacy Ratio (CAR) as independent variables. The results revealed that systematic risk management variables explained 7.04% of the variation in bank profitability (R² = 0.070418), with both DOL and DFL showing negative but significant relationships with ROA at 5% confidence level (p-values of 0.3052 and 0.1199, respectively). At the same time, CAR demonstrated an insignificant negative relationship (p-value = 0.6130). The study concludes that a negative but significant relationship exists between systematic risk management and bank performance, emphasising the need for prudent risk management practices to enhance profitability and protect stakeholder interests in the Nigerian banking sector.