Title: Derivative Accounting And Profitability Of Listed Deposit Money Banks In Nigeria
Authors: Izukwe Raymond
Volume: 9
Issue: 3
Pages: 1-9
Publication Date: 2025/03/28
Abstract:
This study examined the relationship between Derivatives accounting and profitability of deposit money banks (DMBs) in Nigeria from the period of 2015 to 2024 (10years). Derivatives accounting proxied with Liabilities Derivatives Accounting (LDA) and Assets Derivatives Accounting (ADA) (independent variables) in relation to profitability proxied with Return on Assets (ROA) (dependent variable) of DMBs in the Nigeria. The Ex-Post Facto research design was used. The ex-post facto research design is used to acquire information on the current state of a phenomenon and to define 'what exists' in terms of variables or conditions in a setting that is specifically relevant to the issue under investigation. Data on financial derivatives and financial performance were obtained from the annual reports and accounts of ten (10) DMBs listed in Nigeria Exchange Group (NGX) that has international presence. The data set was described using descriptive statistics, followed by the correlation analysis was used to ascertain the co-movement of the independent variables in relation to the dependent variable and several diagnostics tests. Since the data are panel series that the unit root test was conducted to ascertain if the data are stationary in order to have accurate regression result followed by single equation co-integration test while the Panel Multiple Regression analysis were employed with the aid of E-VIEW version 9.0. The findings revealed that LDA and ADA has significant effect on ROA. The study concluded that derivatives accounting has significant effect on profitability of deposit money bank Nigeria. The study recommended that Nigerian DMBs should maintain liabilities and assets derivatives accounting in a bid to increase their ROA and also reduce financial sector risk, the government could create local derivative financial products to hedge foreign exchange risk accounting for the Nigerian banks.