Bank Performance Based on Return on Equity: The Relationship
\nwith Enterprise Risk Management Indicators

In this study, the researchers provide a fresh examination on the nexus
\nbetween return on equity and enterprise risk management indicators for a panel of
\nNigerian banks using pooled OLS, WG-VC and flexible GLS methods. The study aims to
\ndetermine whether the relationship with ERM will improve the performance (return on
\nequity) of the Deposit Money Banks. The findings show that the chief risk officer,
\nmembers of the risk committee, and derivative instruments for hedging foreign
\nexchange rate risk have a positive impact on return, while risk mapping and derivative
\ninstruments for hedging credit risk maintain a positive relationship with return on
\nequity. Banks have continued to fail due to high levels of non-performing loans, poor
\ncorporate governance, negligent credit administration, and failure to meet liquidity
\nand capital ratio prudential ratios. The result clearly showed that enterprise risk
\nmanagement is a positive driver of return on equity. The study concludes that return on
\nequity increase with an increase in risk committee member and derivative instrument
\nfor hedging foreign exchange risk, while the other three ERM indicators and return on
\nequity move in a different direction, that is a negative relationship is evident. Financial
\ninstitutions should weigh the risk vs the potential rewards to decide whether the risk is
\nworthwhile. They can benefit from risks that are worthwhile taking as a result both in
\nthe short and long term.