The Impact of Risk Management Practices on Financial Performance in Nigerian Banks: A Case Study of Access Bank Plc
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Background of the Study
Risk management is a critical component of modern banking operations, enabling financial institutions to identify, assess, and mitigate potential threats to their stability and profitability. Nigerian banks, like their global counterparts, face diverse risks, including credit risk, market risk, operational risk, and liquidity risk. Effective risk management practices are essential for sustaining financial performance and maintaining stakeholder confidence (Adegbite & Nwankwo, 2023).
Access Bank Plc, a leading financial institution in Nigeria, has implemented various risk management strategies to mitigate these challenges. With a focus on regulatory compliance, internal controls, and proactive risk assessment frameworks, the bank seeks to enhance its resilience and profitability (Okeke & Balogun, 2024).
This study investigates the impact of risk management practices on the financial performance of Access Bank Plc, providing insights into the effectiveness of these practices in the Nigerian banking sector.
Statement of the Problem
Despite the emphasis on risk management in the banking sector, many Nigerian banks continue to experience financial instability due to inadequate or ineffective practices. Challenges such as weak internal controls, poor risk assessment, and regulatory lapses hinder the ability of banks to manage risks effectively (Eze & Adewale, 2024).
Access Bank Plc, as a major player in the industry, provides a relevant case for examining the relationship between risk management practices and financial performance. This study addresses the gap in understanding how specific practices contribute to profitability and operational stability in Nigerian banks.
Objectives of the Study
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To examine the relationship between risk management practices and financial performance at Access Bank Plc.
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To identify the key risk management strategies implemented by Access Bank Plc.
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To evaluate the challenges affecting the effectiveness of risk management practices in Access Bank Plc.
Research Questions
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What is the relationship between risk management practices and financial performance at Access Bank Plc?
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What are the key risk management strategies implemented by Access Bank Plc?
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What challenges affect the effectiveness of risk management practices in Access Bank Plc?
Research Hypotheses
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Risk management practices do not significantly influence the financial performance of Access Bank Plc.
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The key risk management strategies implemented by Access Bank Plc do not significantly mitigate risks.
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Challenges do not significantly affect the effectiveness of risk management practices in Access Bank Plc.
Scope and Limitations of the Study
The study focuses on the risk management practices and financial performance of Access Bank Plc from 2018 to 2024. Limitations include restricted access to confidential risk management data and the potential for bias in survey responses from bank employees.
Definitions of Terms
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Risk Management: The process of identifying, assessing, and controlling potential threats to an organization's assets and earnings.
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Financial Performance: A measure of an organization's profitability, stability, and financial health.
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Credit Risk: The risk of financial loss due to a borrower’s failure to meet obligations.
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