Effect of Risk Management Committee Structure on Financial Performance of Listed Financial Institutions in Nigeria

Abstract

This study was prompted by the observed decline in the performance of listed financial institutions in Nigeria. Its primary objective was to investigate how the risk management committee structure affects the financial performance of these institutions listed on the Nigerian Exchange Group (NGX). The research employed ex-post facto and panel data research designs, using data extracted from the audited financial statements of listed financial institutions over a ten-year period from 2012 to 2021. The study focused on a population of thirty-four listed financial institutions, including nineteen deposit money banks and fifteen insurance companies on the NGX. A purposive sampling technique was applied, investigating twenty of these firms due to the availability of complete data. The descriptive statistic and panel regression analysis were adopted. The findings presented significant evidence supporting the notion that the risk management committee (RMC) has a measurable and statistically significant impact on the financial performance of the listed financial institutions in Nigeria. The nature and effectiveness of the RMC within these institutions have a meaningful relationship with various financial metrics or indicators, demonstrating its role in shaping the financial performance of these listed entities. These findings suggest that understanding and optimizing the structure and functions of the risk management committee within financial institutions can significantly impact financial performance. Financial institutions may need to consider these aspects while establishing or restructuring their RMC to enhance their financial performance.