Empirical Analysis of Counterparty Risk and Exchange Rate Risk Management on the Performance of Deposit Money Banks in Nigeria (2009-2013)

Abstract

The study investigated the effect of counterparty risk and exchange rate risk on the profitability of deposit money banks in Nigeria. Profit before tax was measured as a function of non-performing loans; seven banks were selected on a cross-sectional basis for five years. Secondary data were used and an autoregression conditional model was used to measure risk. The result revealed that counterparty risk and exchange rate risk have significant effect on bank performance- profitability. Accordingly, stringent but non-static credit policy and prudent exchange rate management to enhance economy were suggested.