European Journal of Business, Economics and Accountancy Vol. 6, No. 2, 2018 ISSN 2056-6018 Progressive Academic Publishing, UK Page 30 www.idpublications.org RISK MANAGEMENT AND FINANCIAL PERFORMANCE OF DEPOSIT MONEY BANKS IN NIGERIA Mr. Okere Wisdom* wisescar@yahoo.com Dr Isiaka, Muideen A.* dr.isiaka@gmail.com Ogunlowore Akindele J.* Ak_pump@yahoo.com *Department Of Economics, Accounting and Finance Bells University of Technology, Ota. Ogun State, NIGERIA Corresponding Author: Okere Wisdom Email: wisescar@yahoo.com ABSTRACT The study explored the impact of risk management (credit and liquidity) on financial performance of money deposit banks in Nigeria. The study employed panel methodology and other econometric techniques such as hausman test, descriptive statistics. Results from the panel regression show a positive relationship between risk management and financial performance of money deposit banks. The study recommends that banks in Nigeria should augment their capacity in, liquidity risk analysis, and credit analysis and loan administration while the regulatory bodies should pay more attention to banks’ compliance to regulations of the Bank and other Financial Institutions prudential guidelines. Keywords: Liquidity Risk; Profitability; Credit Risk; Liquidity; Deposit Money Banks. 1.0 INTRODUCTION The Nigerian Banking sector in recent years has undergone series of financial distress and operational failures. Banks previously performing well suddenly disclosed huge financial issues as a result of unfavourable credit exposures , interest rate position taken or derivate exposures that was supposed to reduce balance sheet risk. Cooker (1989), observes opines the main function of a bank is the collection of deposits from those with surplus cash resources and the lending of these cash resources to those with an immediate need for them. These features are required to provide guidance to member countries, including Nigeria, in having required accessibility to financial instruments to source for capital. The Basel Committee paved way for the creation of the “New Capital Accord” which was implemented in 2007. The New Capital Accord required capital charges to be accrued for credit, market and operational risks. This is in line with the objective of protecting depositors, consumers, and the citizens against losses emerging from bank failures (Umoh, 2005). With reference since 1988, directors of the Nigerian Banking industry have displayed interest in refining the risk analysis, measurement and management capacity of firms in the banking sector. According to Soludo (2005), business operations in the financial sector was to make Nigeria money deposit banks compete positively in the global stock market and to spawn a large capital base that will make available resources for banks to settle compliance cost in the region of credit and market risk management Risk management is at the core of lending in the banking industry. Many Nigerian banks had failed in the past due to inadequate risk management exposure. Banks are greatly opened to