RISK ASSESSMENT AND ASSETS QUALITY OF FINANCIAL INSTITUTIONS IN NIGERIA

Risk assets creation constitute the most prominent and primary source of earnings to financial institutions across the globe. It therefore becomes imperative that these activities must be properly assessed to mitigate credit risk thereof. The objective of this study was to find out the effect of risk assessment on the risk assets quality of financial institutions in Nigeria using board credit committee size and audit committee members with financial expertise as variables of investigation. Utilizing secondary data sourced from the yearly reports of selected financial institutions covering the period from 2010 to 2022 provides a rich data set for analysis. The population of the study comprised all eleven categories of financial institutions in Nigeria as of December 31, 2022. However, the study purposively examined a subset of this population, consisting of four categories of financial institutions, totaling 38 elements. Data were analysed through the use of feasible generalised least squared regression method. The findings indicated that board credit committee size has negative and significant effect on assets quality. On the other hand, audit committee member with financial expertise has positive and significant effect on assets quality of Nigerian financial institutions. The study concluded that board credit committee size has potentials to reduce incidences of non-performing loans of financial institutions in Nigeria. The study therefore recommended for a policy document that will harmonize 'board credit charters' of different institutions for uniformity as this will improve public perception and mitigation of credit risk exposure on the assets quality of financial institutions in Nigeria.