Effect of Market Risk on the Financial Performance of Listed Deposit Money Banks in Nigeria

This study investigates the effect of market risk on the performance of listed deposit money banks in Nigeria. The research adopts ex post facto research design. The target population comprised 13 deposit money banks listed on the Nigeria Exchange Limited (NGX) between 2006 - 2021. Secondary data was utilized. The study measures market risk using the degree of financial leverage (DFL), Interest rate risk (IRR), and Gearing ratio (GER). The study measured financial performance using return on equity (ROE) while the panel data analysis technique and GMM method were used to analyse the data with the aid of STATA Version 15. The result of the study revealed that iinterest rate risk has a negative and significant effect, while DFI and GER have negative but insignificant effect on ROE. Amongst others, the study recommended that managers should leverage on the utilization of financial instruments to reduce their interest rate risk exposure.