OPERATIONAL RISK MANAGEMENT PRACTICES AND PERFORMANCE: EVIDENCE FROM NON-INTEREST LISTED DEPOSIT MONEY BANK IN NIGERIA

Abstract

Operational risk exposure in the banks has been the major problem faced by the banking industry in Nigeria, ineffective in the management of this risk has negatively affected their performance in term of profitability and efficiency. Several measures such as Basel framework and CBN prudential guideline have been put in place to eradicate this risk exposure. Yet, exposure of banks to this risk seems to be significant and have effect on their performance. Thus, this formed the reason for carrying out this study, as this study seeks to determine the effect of operational risk management practices on the performance in term of profitability and efficiency of non-interest bank. This study adopted Expo facto research design and data used for this study is between 2018 -2023 using Jaiz Bank plc.Newey- West Standard errors was used as a method of data analysis. Thus, result showed that there exist a positive effect and not significant influence between operational risk management practices and profitability (beta value at 0.00803, p-value 0.101). Also, there is negative and significant linkage between operational risk management and efficiency (beta value -0.049, p-value 0.06).Thus, operational risk management practices has a significant but negative influence on the performance of non-interest bank Nigeria. Non -interest banks are advised to focus less in using operational risk management for the improvement of their efficiency as any attempt to will cause negative effect on the performance in term of efficiency.