Financial Management Practices and Profitability of Deposit Money Banks in Nigeria

Abstract:

The study aims to investigate the financial management practices and profitability of deposit money banks in Nigeria. It is guided by The Stakeholder theory and The Porter’s theory. The research design employed for this study is ex-post facto. The universal population includes all DMB in Nigeria that were operational as of 2022. Secondary data were collected from the annual reports of selected commercial banks in Nigeria, which will be used as panel data for the study. The results of the study revealed significant impacts of various financial management practices on profitability. Non-performing loan showed a significant impact on profitability, as evidenced by a high F-statistic of 10.62768 and a low p-value of 0.000001. Similarly, Loan Loss Provision Ratio demonstrated a significant impact on profitability, with an F-statistic of 9.218826 and a p-value of 0.000034. Furthermore, Loan and Advance Ratio also had a notable impact on profitability, with a significant F-statistic of 11.13815 and a low p-value of 0.000005. Additionally, Capital Adequacy ratio was found to have a significant impact on profitability, supported by an F-Rstatistic of 0.976643 and a p-value of 0.009176. It was determined that financial management procedures significantly influence the profitability of Deposit Money Banks in Nigeria, proving that these practices are important in determining the financial success of the banks under investigation. the following recommendations to enhance loan loss provisioning, increase loan and advance ratio, concentrate on capital adequacy and financial stability, and strengthen credit risk management are made to improve banks' financial performance.