Challenge of Risk Management in Nigerian Banks in the Post Consolidation Era

IBRAHIM SAMSON

Department of Marketing

Federal Polytechnic, Idah, Kogi State, Nigeria

E-mail: samsonibrahim44@yahoo.com

ABSTRACT

Many empirical literature showed several attempts at explaining and measuring risk-taking behaviour in banks to incentives created by safety net programmes such as the fixed-rate deposit insurance system which though arguably, engenders cross-subsidization by creating avenues to take on risk insufficiently; the so-called moral hazard problem. The moral hazard view of risk taking in banks assumes that shareholders make the lending and investment decisions and therefore take a risk to maximize the value at Insurance it they so desire. The foregoing discussion becomes even more imperative with the on-going reforms in the Nigerian-banking industry. This-paper attempts to-provide an-overview-of risk management practices in insured banks in Nigeria. As we are now in the post consolidation era, consistent with the efficiency argument of a market economy, the need to foster healthy competition amongst fewer, mega banks becomes pertinent. Amongst the host of risks envisaged, those risks considered most important are Identified, and their management and mitigating factors are analyzed. The risks relating to mergers and acquisitions (M & As) were also mentioned. The study employed trend analysis at variables to derive its results arid concluded by pointing to some steps that would help to preserve the banking system and sustain its impact on our fragile economy.